Long-Term Debt

9 Months Ended

Sep. 30, 2018

LONG-TERM DEBT

Our long-term debt consisted of the following (dollars in thousands):



	Interest rate at September 30, 2018	September 30, 2018		December 31, 2017
Senior unsecured notes due 2022	5.625%	$	400,000	$	400,000
Senior unsecured notes due 2023	5.625%	350,000		350,000
Senior unsecured notes due 2025	6.375%	325,000		325,000
Senior unsecured notes due 2026	7.250%	300,000		300,000
SemGroup $1.0 billion corporate revolving credit facility⁽¹⁾
Alternate base rate borrowings	7.000%	85,000		—
Eurodollar borrowings	4.871%	375,000		131,000
HFOTCO acquisition final payment		—		565,868
HFOTCO term loan B ⁽²⁾	5.000%	598,500		532,125
HFOTCO tax exempt notes payable due 2050	3.198%	225,000		225,000



HFOTCO $75 million revolving credit facility	—			60,000
Capital leases	—			25
Unamortized premium (discount) and debt issuance costs, net	(33,014		)	(30,398		)
Total long-term debt, net	2,625,486			2,858,620
Less: current portion of long-term debt	6,000			5,525
Noncurrent portion of long-term debt, net	$	2,619,486		$	2,853,095


(1)	SemGroup $1.0 billion corporate revolving credit facility matures on March 15, 2021.


(2)	HFOTCO term loan B is due in quarterly installments of $1.5 million with a final payment due on June 26, 2025.

HFOTCO credit agreement

On June 26, 2018, HFOTCO and Buffalo Gulf Coast Terminals LLC ("BGCT") entered into an Amendment and Restatement Agreement (the “Amendment and Restatement Agreement”). Pursuant to the Amendment and Restatement Agreement, the HFOTCO credit agreement was amended and restated in its entirety (as so amended and restated, the “Restated HFOTCO Credit Agreement”).

The Restated HFOTCO Credit Agreement increases the aggregate term loans incurred thereunder to $600 million, terminates the HFOTCO $75.0 million revolving credit facility, and extends the maturity date of the term loans to June 26, 2025 (the “Maturity Date”). In addition, HFOTCO may incur additional term loans in an aggregate amount not to exceed the greater of $120 million and a measure of HFOTCO’s EBITDA, defined in the credit agreement, at the time of determination, plus additional amounts subject to satisfaction of certain leverage-based criteria, subject to receiving commitments for such additional term loans from either new lenders or increased commitments from existing lenders. The term loan B was issued at a discount of $1.5 million.

At HFOTCO’s option, the term loans will bear interest at the Eurodollar rate or an alternate base rate (“ABR”), plus, in each case, an applicable margin of 2.75% relating to any term loans accruing interest at the Eurodollar rate and 1.75% relating to term loans accruing interest at ABR.

The Restated HFOTCO Credit Agreement includes customary representations and warranties and affirmative and negative covenants, which were made only for the purposes of the Restated HFOTCO Credit Agreement and as of the specific date (or dates) set forth therein, and may be subject to certain limitations as agreed upon by the contracting parties, and apply only to BGCT, HFOTCO and any subsidiaries of HFOTCO party to the Restated HFOTCO Credit Agreement. Such limitations include the creation of new liens, indebtedness, making of certain restricted payments and payments on indebtedness, making certain dispositions, making material changes in business activities, making fundamental changes including liquidations, mergers or consolidations, making certain investments, entering into certain transactions with affiliates, making amendments to material agreements, modifying the fiscal year, dealing with hazardous materials in certain ways, entering into certain hedging arrangements, entering into certain restrictive agreements, and funding or engaging in sanctioned activities.

The Restated HFOTCO Credit Agreement includes customary events of default, including events of default relating to inaccuracy of representations and warranties in any material respect when made or when deemed made, non-payment of principal and other amounts owing under the Restated HFOTCO Credit Agreement, including, in respect of, violation of covenants, cross acceleration to any material indebtedness of BGCT, HFOTCO and its subsidiaries, bankruptcy and insolvency events, certain unsatisfied judgments, certain ERISA events, certain invalidities of loan documents and the occurrence of a change of control. A default under the Restated HFOTCO Credit Agreement would permit the participating banks to require immediate repayment of any outstanding loans with interest and any unpaid accrued fees, and subject to intercreditor arrangements with the holders of the HFOTCO tax exempt notes payable, exercise other rights and remedies.

HFOTCO acquisition final payment

On April 17, 2018, we made the final payment related to the HFOTCO acquisition in the amount of $579.6 million. The payment was funded through revolving credit facility borrowings and cash on hand.

Pledges and guarantees

Our senior unsecured notes are guaranteed by certain subsidiaries. See Note 16 for additional information.

Our $1.0 billion corporate revolving credit facility is guaranteed by all of SemGroup’s material wholly-owned domestic subsidiaries, with the exception of Maurepas Pipeline LLC and HFOTCO, and secured by a lien on substantially all of the property and assets of SemGroup Corporation and the other loan parties, subject to customary exceptions.

The HFOTCO term loan B and HFOTCO tax exempt notes payable are secured by substantially all of the assets of HFOTCO and its immediate parent, BGCT. The HFOTCO tax exempt notes payable have a priority position over the HFOTCO term loan B.

Letters of credit

We had the following outstanding letters of credit at September 30, 2018 (dollars in thousands):



SemGroup $1.0 billion revolving credit facility	2.75%	$	28,335
Secured bi-lateral⁽¹⁾	1.75%	$	47,501

(1) Secured bi-lateral letters of credit are external to the SemGroup $1.0 billion revolving credit facility and do not reduce availability for borrowing on the credit facility.

Capitalized interest

During the nine months ended September 30, 2018 and 2017, we capitalized interest of $9.6 million and $15.4 million, respectively.

Fair value

We estimate the fair value of our senior unsecured notes based on unadjusted, transacted market prices near the measurement date. Our other long-term debts are estimated to be carried at fair value as a result of the recent timing of borrowings or rate resets. We estimate the fair value of our consolidated long-term debt, including current maturities, to be approximately $2.6 billion at September 30, 2018, which is categorized as a Level 2 measurement.