Debt - Level 1 Tag

6 Months Ended

Jun. 30, 2020

Debt

Debt outstanding consisted of the following:


(in millions)	June 30, 2020		December 31, 2019
Senior Secured Term Loan B-5, payable in quarterly installments through November 15, 2026, with periodic variable interest at LIBOR or alternate base rate, plus applicable margin (1.93% at June 30, 2020, and 3.55% at December 31, 2019), net of original issue discount and deferred financing fees of $4.5 million and $10.9 million, respectively, at June 30, 2020, and original issue discount and deferred financing fees of $4.8 million and $11.7 million, respectively, at December 31, 2019	$	2,496.6	$	2,508.5
Senior Secured Term Loan A-3, payable in quarterly installments through December 10, 2024, with periodic variable interest at LIBOR or alternate base rate, plus applicable margin (1.68% at June 30, 2020, and 3.30% at December 31, 2019), net of original issue discount and deferred financing fees of $2.9 million and $1.8 million, respectively, at June 30, 2020, and original issue discount and deferred financing fees of $3.3 million and $2.2 million, respectively, at December 31, 2019	1,130.9		1,144.5
Senior Secured Revolving Credit Facility	—		—
Other notes payable	1.4		3.7
Finance leases	0.2		0.3
Total debt	3,629.1		3,657.0
Less short-term debt and current portion of long-term debt	(55.7)		(58.7)
Total long-term debt	$	3,573.4	$	3,598.3

Senior Secured Credit Facility

On June 15, 2010, we entered into a Senior Secured Credit Facility with various lenders. This facility has been amended several times and currently consists of the Senior Secured Term Loan B-5 and the Senior Secured Term Loan A-3 (collectively, the “Senior Secured Term Loans”), and the Senior Secured Revolving Credit Facility.

As of June 30, 2020, we had no outstanding balance under the Senior Secured Revolving Credit Facility, $0.1 million of outstanding letters of credit, and could have borrowed up to the remaining $299.9 million available.

TransUnion also has the ability to request incremental loans on the same terms under the Senior Secured Credit Facility up to the greater of $1,000.0 million and 100% of consolidated EBITDA for the four quarters preceding such request date, and may incur additional incremental loans so long as the senior secured net leverage ratio does not exceed 4.25-to-1, subject to certain additional conditions and commitments by existing or new lenders to fund any additional borrowings.

With certain exceptions, the Senior Secured Credit Facility obligations are secured by a first-priority security interest in substantially all of the assets of Trans Union LLC, including its investment in subsidiaries. The Senior Secured Credit Facility contains various restrictions and nonfinancial covenants, along with a senior secured net leverage ratio test. The nonfinancial covenants include restrictions on dividends, investments, dispositions, future borrowings and other specified payments, as well as additional reporting and disclosure requirements. The senior secured net leverage test must be met as a condition to incur additional indebtedness, make certain investments, and may be required to make certain restricted payments. The senior secured net leverage ratio must not exceed 5.5-to-1 at any such measurement date. Under the terms of the Senior Secured Credit Facility, TransUnion may make dividend payments up to the greater of $75 million or 7.5% of Consolidated EBITDA per year, or an unlimited amount provided that no default or event of default exists and so long as the total net leverage ratio does not exceed 4.75-to-1. As of June 30, 2020, we were in compliance with all debt covenants.

On March 10, 2020, we entered into two tranches of interest rate swap agreements with various counter-parties that effectively fix our LIBOR exposure on a portion of our Senior Secured Term Loans or similar replacement debt. The first tranche commenced on June 30, 2020, and expires on June 30, 2022, with an initial notional amount of $1,150.0 million that amortizes each quarter. The first tranche requires TransUnion to pay fixed rates varying between 0.5200% and 0.5295% in exchange for receiving a variable rate that matches the variable rate on our loans. The second tranche commences on June 30, 2022, and expires on June 30, 2025, with an initial notional amount of $1,110.0 million that amortizes each quarter. The second tranche requires TransUnion to pay fixed rates varying between 0.9125% and 0.9280% in exchange for receiving a variable rate that matches the variable rate on our loans. We have designated these swap agreements as cash flow hedges.

On December 17, 2018, we entered into interest rate swap agreements with various counter-parties that effectively fix our LIBOR exposure on a portion of our Senior Secured Term Loans or similar replacement debt, which is currently fixed at

2.702% and 2.706%. We have designated these swap agreements as cash flow hedges. The current aggregate notional amount under these agreements is $1,420.0 million, decreasing each quarter until the second agreement terminates on December 30, 2022.

On December 18, 2015, we entered into interest rate cap agreements with various counter-parties that effectively cap our LIBOR exposure on a portion of our Senior Secured Term Loans or similar replacement debt at 0.75% beginning June 30, 2016. These cap agreements expired on June 30, 2020, and were previously designated as cash flow hedges.

The change in the fair value of our hedging instruments, included in our assessment of hedge effectiveness, is recorded in other comprehensive income, and reclassified to interest expense when the corresponding hedged debt affects earnings.

The net change in the fair value of the swaps resulted in an unrealized loss of $12.8 million ($9.6 million, net of tax) and $59.7 million ($44.9 million, net of tax) for the three and six months ended June 30, 2020, respectively, recorded in other comprehensive income. The net change in the fair value of the swaps resulted in an unrealized loss of $24.3 million ($18.2 million, net of tax) and $38.1 million ($28.6 million, net of tax) for the three and six months ended June 30, 2019, respectively, recorded in other comprehensive income. Interest expense on the swaps in the three and six months ended June 30, 2020 was expense of $7.9 million ($6.6 million, net of tax) and $11.6 million ($8.8 million, net of tax), respectively. Interest expense on the swaps in the three and six months ended June 30, 2019 was expense of $0.6 million ($0.5 million, net of tax) and $1.2 million ($0.9 million, net of tax), respectively. We expect to recognize a loss of approximately $40.3 million as interest expense due to our expectation that LIBOR will exceed the fixed rates of interest over the next twelve months.

The net change in the caps resulted in a recognition into interest expense previously unrealized loss of $4.5 million ($3.4 million, net of tax) and $4.1 million ($3.1 million, net of tax) for the three and six months ended June 30, 2020, respectively, previously recorded in other comprehensive income. The net change in the fair value of the caps resulted in an unrealized loss of $7.1 million ($5.3 million, net of tax) and $11.7 million ($8.8 million, net of tax) for the three and six months ended June 30, 2019, respectively, recorded in other comprehensive income. Interest expense reclassified from other comprehensive income to interest expense related to the fair value of the portion of the caps expiring in the three and six months ended June 30, 2020, was expense of $4.6 million ($3.9 million, net of tax) and $6.7 million ($5.1 million, net of tax), respectively. Interest expense reclassified from other comprehensive income to interest expense related to the fair value of the portion of the caps expiring in the three and six months ended June 30, 2019, was income of $1.3 million ($1.0 million, net of tax) and $3.0 million ($2.2 million, net of tax), respectively.

Fair Value of Debt

As of June 30, 2020, the fair value of our variable-rate Senior Secured Term Loan A-3, excluding original issue discounts and deferred fees was approximately $1,118.6 million. As of June 30, 2020, the fair value of our Senior Secured Term Loan B-5, excluding original issue discounts and deferred fees, was approximately $2,411.5 million. The fair values of our variable-rate term loans are determined using Level 2 inputs, based on quoted market prices for the publicly traded instruments.