Debt and Financing Transactions

9 Months Ended

Sep. 30, 2011

Debt and Financing Transactions [Abstract]

Note 7. Debt and Financing Transactions

Other than the Company’s accounts receivable securitization as discussed in Note 8 and its outstanding capital lease obligations as discussed in Note 9, the Company had long-term debt outstanding at September 30, 2011 and December 31, 2010, respectively, as follows (in thousands):


	September 30,		December 31,
	2011		2010
Senior secured first lien term loan due December 2016, net of $9,298 and $10,649 OID at September 30, 2011 and December 31, 2010, respectively	$	925,091	$	1,059,351
Senior second priority secured notes due November 15, 2018, net of $9,018 and $9,965 OID at September 30, 2011 and December 31, 2010, respectively		490,982		490,035
Floating rate notes due May 15, 2015		—		11,000
12.50% fixed rate notes due May 15, 2017		15,638		15,638
Note payable, with principal and interest payable in five annual payments of $514 plus interest at a fixed rate of 7.00% through February 2013 secured by real property		1,028		1,542
Notes payable, with principal and interest payable in 24 monthly payments of $130 including interest at a fixed rate of 7.5% through May 2011		—		512
Notes payable, with principal and interest payable in 36 monthly payments of $38 at a fixed rate of 4.25% through December 2013		1,041		1,394

Total long-term debt		1,433,780		1,579,472
Less: current portion		978		10,304

Long-term debt, less current portion	$	1,432,802	$	1,569,168

The majority of currently outstanding debt was issued in December 2010 to refinance debt initially incurred in connection with the Company’s acquisition of Swift Transportation Co. in May 2007, a going private transaction under SEC rules. The debt outstanding at September 30, 2011 primarily consists of proceeds from a first lien term loan, pursuant to a senior secured credit facility with a group of lenders, with a face value of $934.4 million at September 30, 2011, net of unamortized original issue discount of $9.3 million, and proceeds from the offering of $500 million face value of senior second priority secured notes, net of unamortized original issue discount of $9.0 million at September 30, 2011. The credit facility and senior notes are secured by substantially all of the assets of the Company and are guaranteed by Swift Transportation Company, IEL, Swift Transportation Co. and its domestic subsidiaries other than its captive insurance subsidiaries, driver training academy subsidiary, and its bankruptcy-remote special purpose subsidiary. As of September 30, 2011 and December 31, 2010, the balance of deferred loan costs was $23.5 million and $23.1 million, respectively, and is reported in other assets in the consolidated balance sheets.

Senior Secured Credit Facility

The credit facility was entered into on December 21, 2010 and consists of a first lien term loan with an original aggregate principal amount of $1.07 billion due December 2016 and a $400 million revolving line of credit due December 2015. As of September 30, 2011, interest on the first lien term loan accrues at 6.00% (the LIBOR floor of 1.50% plus the applicable margin of 4.50%). As of September 30, 2011, there were no borrowings under the $400 million revolving line of credit, while the Company had outstanding letters of credit under the revolving line of credit primarily for workers’ compensation and self-insurance liability purposes totaling $166.7 million, leaving $233.3 million available under the revolving line of credit. Outstanding letters of credit incur fees of 4.50% per annum. The Company was in compliance with the covenants in the senior secured credit agreement at September 30, 2011.

On September 29, 2011, the Company made a $75 million voluntary prepayment on its senior secured first lien term loan. The prepayment was funded through the release of previously restricted cash from the Company’s captive insurance subsidiaries and from other cash on hand. Additionally, in January 2011, the Company used $60.0 million of proceeds from its issuance of an additional 6,050,000 shares of its Class A common stock, as discussed in Note 3, to pay down the first lien term loan. As a result of these prepayments, there are no scheduled principal payments remaining on the first lien term loan until its maturity in December 2016.

Senior Second Priority Secured Notes

On December 21, 2010, Swift Services Holdings, Inc., a wholly-owned subsidiary, completed a private placement of senior second priority secured notes totaling $500 million face value which mature in November 2018 and bear interest at 10.00% (the “senior notes”). The Company received proceeds of $490 million, net of a $10.0 million original issue discount. Interest on the senior notes is payable on May 15 and November 15 each year. The Company was in compliance with the covenants in the indenture governing the senior notes at September 30, 2011.

Fixed and Floating-Rate Notes

As of September 30, 2011, there was $15.6 million outstanding of 12.50% fixed rate notes due May 15, 2017. The Company was in compliance with the covenants in the indenture governing the fixed rate notes at September 30, 2011. In August 2011, the Company completed its call of the remaining $11.0 million face value of floating rate notes due 2017, at par.