Note 8 - Debt

The following table provides details of the carrying values of debt as of the dates indicated (in millions):



		December 31,
Description	Maturity Date	2015			2014
Senior secured credit facility:
Revolving loans	October 29, 2018	$	208.5		$	282.7
Term loan	November 21, 2019	250.0			250.0
4.875% Senior Notes	March 15, 2023	400.0			400.0
Other credit facilities	Varies	16.4			1.2
Capital lease obligations, weighted average interest rate of 2.8%	In installments through June 13, 2021	130.9			176.5
Notes payable, equipment, weighted average interest rate of 2.7%	In installments through June 30, 2018	17.4			24.4
Total debt		$	1,023.2		$	1,134.8
Less current maturities		(77.7		)	(73.6		)
Long-term debt		$	945.5		$	1,061.2

Senior Secured Credit Facility

The Company’s senior secured credit facility, as amended to date, referred to as the Credit Facility, has aggregate borrowing commitments totaling $1.25 billion, which is composed of $1.0 billion of revolving commitments and a term loan in the aggregate principal amount of $250 million (the “Term Loan”). The Credit Facility provides the ability to borrow in either Mexican pesos or Canadian dollars, up to an aggregate equivalent amount of $200 million. Revolving commitments under the Credit Facility mature on October 29, 2018, and the Term Loan matures on November 21, 2019. The Term Loan is subject to amortization in quarterly principal installments of $3.1 million, subject to reduction as a result of the application of certain prepayments in accordance with the terms of the Credit Facility, commencing as of the quarter ending March 31, 2016. The maximum amount available for letters of credit under the Credit Facility is $450 million, of which up to $100 million can be denominated in either Mexican pesos or Canadian dollars. The Credit Facility also provides for swing line loans of up to $75 million. Under the Credit Facility, the Company has the option to increase revolving commitments and/or establish additional term loan tranches in an aggregate amount of $250 million, subject to certain conditions. Borrowings under the Credit Facility are used for working capital requirements, capital expenditures and other corporate purposes, including equity, joint venture or other investments, the repurchase or prepayment of indebtedness and share repurchases. Approximately $1.5 million, $2.5 million and $1.9 million of financing costs were incurred during the years ended December 31, 2015, 2014 and 2013, respectively, in connection with the Credit Facility. Total deferred financing costs associated with the Credit Facility, including the Term Loan, totaled $6.4 million and $6.9 million, net of accumulated amortization, as of December 31, 2015 and 2014, respectively.

As of December 31, 2015 and 2014, outstanding revolving loans under the Credit Facility accrued interest at weighted average rates of approximately 2.95% and 2.18% per annum, respectively, and the Term Loan accrued interest at a rate of 2.42% and 1.92% as of December 31, 2015 and 2014, respectively. Letters of credit of approximately $292.8 million and $153.6 million were issued as of December 31, 2015 and 2014, respectively. As of December 31, 2015 and 2014, letter of credit fees accrued at 1% and 0.875% per annum, respectively, for performance standby letters of credit and at 2% and 1.75% per annum, respectively, for financial standby letters of credit. Outstanding letters of credit mature at various dates and most have automatic renewal provisions, subject to prior notice of cancellation. As of December 31, 2015 and 2014, borrowing capacity of $498.7 million and $563.7 million, respectively, was available for revolving loans, or up to $157.2 million and $296.4 million, respectively, for new letters of credit. The unused facility fee was 0.40% and 0.35% as of December 31, 2015 and 2014, respectively.

Under an “accordion” feature of the Credit Facility, the Company has the option, subject to certain conditions, to increase revolving commitments and/or establish additional term loan tranches in an aggregate amount of $250 million. These additional term loan tranches may, subject to certain terms and conditions described in the Credit Facility, rank equal or junior in respect of right of payment and/or collateral to the Credit Facility and may, subject to certain limitations described in the Credit Facility, have terms and pricing that differ from the Credit Facility.

Outstanding revolving loans and the Term Loan under the Credit Facility bear interest, at the Company’s option, at a rate equal to either (a) a Eurocurrency Rate, as defined in the Credit Facility, plus a margin of 1.00% to 2.00% or (b) a Base Rate, plus a margin of 0.00% to 1.00%. The Base Rate equals the highest of (i) the Federal Funds Rate, as defined in the Credit Facility, plus 0.50%, (ii) Bank of America’s prime rate and (iii) the Eurocurrency Rate plus 1.00%. Financial standby letters of credit and commercial letters of credit issued under the Credit Facility are subject to a letter of credit fee of 1.00% to 2.00%, and performance standby letters of credit are subject to a letter of credit fee of 0.50% to 1.00%. The Company must also pay a commitment fee to the lenders of 0.20% to 0.40% on any unused availability under the Credit Facility. In each of the foregoing cases, the applicable margin or fee is based on the Company’s Consolidated Leverage Ratio, as defined in the Credit Facility, as of the then most recent fiscal quarter.

The Credit Facility provides for a maximum Consolidated Leverage Ratio, as defined in the Credit Facility, of up to (i) 4.25 until September 29, 2016, (ii) 4.00 during the period commencing on September 30, 2016 and ending on December 30, 2016, and (iii) 3.50 thereafter (subject to the Acquisition Adjustment described below). The Credit Facility also requires that the Company maintain a minimum Consolidated Interest Coverage Ratio, as defined in the Credit Facility, of 3.00. The Credit Facility provides that, for purposes of calculating the Consolidated Leverage Ratio, certain cash charges may be added back to the calculation of Consolidated EBITDA, as defined in the Credit Facility, and funded indebtedness excludes the undrawn standby performance letters of credit. Additionally, notwithstanding the terms discussed above, subject to certain conditions, if a permitted acquisition or series of permitted acquisitions having consideration exceeding $50 million occurs during a fiscal quarter, the Consolidated Leverage Ratio may be temporarily increased to up to 3.75 during such fiscal quarter and the subsequent two fiscal quarters (the “Acquisition Adjustment”). Such right may be exercised no more than two times during the term of the Credit Facility.

Subject to customary exceptions, the Credit Facility limits the borrowers’ and the Guarantor Subsidiaries’ ability to engage in certain activities, including acquisitions, mergers and consolidations, debt incurrence, investments, capital expenditures, asset sales, debt prepayments, lien incurrence and the making of distributions or repurchases of capital stock. However, distributions payable solely in capital stock are permitted. The Credit Facility provides for customary events of default and carries cross-default provisions with the Company’s other significant debt instruments, including the Company’s indemnity agreement with its surety provider, as well as customary remedies, including the acceleration of repayment of outstanding amounts and other remedies with respect to the collateral securing the Credit Facility obligations.

The Credit Facility is guaranteed by certain subsidiaries of the Company (the “Guarantor Subsidiaries”) and the obligations under the Credit Facility are secured by substantially all of the Company’s and the Guarantor Subsidiaries’ respective assets, subject to certain exceptions. Under the Credit Facility, if the “Loan Party EBITDA,” as defined in the Credit Facility, as of the last four consecutive fiscal quarters does not represent at least 70% of the “Adjusted Consolidated EBITDA,” as defined in the Credit Facility, for such period, then the Company must designate additional subsidiaries as Guarantor Subsidiaries, and cause them to join the applicable guaranty and security agreements to the Credit Facility. Additionally, any domestic subsidiary with consolidated EBITDA of at least 15% of the Adjusted Consolidated EBITDA must become a Guarantor Subsidiary and join the applicable guaranty and security agreements.

Other Credit Facilities. The Company has other credit facilities that support the working capital requirements of its foreign operations. Borrowings under these credit facilities, which have varying dates of maturity and are generally renewed on an annual basis, are primarily denominated in Canadian dollars. Maximum borrowing capacity totaled Canadian $40.0 million and $45.0 million as of December 31, 2015 and 2014, respectively, or approximately $28.9 million and $38.7 million, respectively. Outstanding borrowings totaled approximately $16.4 million and $1.2 million as of December 31, 2015 and 2014, respectively, and accrued interest at weighted average rates of 3.6% and 4.0%, respectively. Outstanding borrowings that are not renewed are repaid with borrowings under the Credit Facility. Accordingly, the carrying amounts of the Company’s borrowings under its other credit facilities are classified within long-term debt in the Company’s consolidated balance sheets. The Company’s other credit facilities are subject to customary provisions and covenants.

4.875% Senior Notes and 7.625% Senior Notes

The Company has $400 million of 4.875% Senior Notes due March 15, 2023, which were issued in March 2013 in a registered public offering. Interest on the 4.875% Senior Notes is payable on March 15 and September 15 of each year. The 4.875% Senior Notes are senior unsecured unsubordinated obligations and rank equal in right of payment with existing and future unsubordinated debt, and rank senior in right of payment to existing and future subordinated debt and are fully and unconditionally guaranteed on an unsecured, unsubordinated, joint and several basis by certain of the Company’s existing and future 100%-owned direct and indirect domestic subsidiaries that are each guarantors of the Credit Facility or other outstanding indebtedness. See Note 18 - Supplemental Guarantor Condensed Consolidating Financial Information. The 4.875% Senior Notes are effectively junior to MasTec’s secured debt, including the Credit Facility and the Term Loan, to the extent of the value of the assets securing that debt.

The Company has the option to redeem all or a portion of the 4.875% Senior Notes at any time on or after March 15, 2018 at the redemption prices set forth in the indenture that governs the 4.875% Senior Notes (the “4.875% Senior Notes Indenture”) plus accrued and unpaid interest, if any, to the redemption date. At any time prior to March 15, 2018, the Company may redeem all or a part of the 4.875% Senior Notes at a redemption price equal to 100% of the principal amount of 4.875% Senior Notes redeemed plus an applicable premium, as defined in the 4.875% Senior Notes Indenture, together with accrued and unpaid interest, if any, to the redemption date. In addition, at any time prior to March 15, 2016, the Company may redeem up to 35% of the principal amount of the 4.875% Senior Notes using the net cash proceeds of one or more sales of the Company’s capital stock, as defined in the 4.875% Senior Notes Indenture, at a redemption price of 104.875% of the principal amount, plus accrued and unpaid interest to the redemption date.

The 4.875% Senior Notes Indenture, among other things, generally limits the ability of the Company and certain of its subsidiaries, subject to certain exceptions, to (i) incur additional debt and issue preferred stock, (ii) create liens, (iii) pay dividends, acquire shares of capital stock, make payments on subordinated debt or make investments, (iv) place limitations on distributions from certain subsidiaries, (v) issue guarantees, (vi) issue or sell the capital stock of certain subsidiaries, (vii) sell assets, (viii) enter into transactions with affiliates and (ix) effect mergers. The 4.875% Senior Notes Indenture provides for customary events of default, as well as customary remedies upon an event of default, as defined in the 4.875% Senior Notes Indenture, including acceleration of repayment of outstanding amounts. In connection with the delayed filings of certain of the Company’s SEC reports in 2015, the Company paid consent and solicitation agent fees of $0.9 million and $0.8 million, respectively, related to consents that extended the reporting deadlines of the 4.875% Senior Notes. The consent and solicitation agent fees were recorded within deferred financing costs and interest expense, respectively.

In connection with the issuance of the 4.875% Senior Notes in 2013, approximately $7.7 million in financing costs were paid. Total deferred financing costs related to the 4.875% Senior Notes, net of accumulated amortization, were $6.4 million and $6.3 million, as of December 31, 2015 and 2014, respectively. These deferred financing costs are included as prepaid expenses and other current assets and other long-term assets, as appropriate, within the consolidated balance sheets. The Company used a portion of the proceeds from the 4.875% Senior Notes offering to fund the repurchase and redemption of the Company’s $150 million principal amount of the Company’s 7.625% senior notes due 2017 (the “7.625% Senior Notes”). The remaining net proceeds were used for working capital and other general corporate purposes.

In connection with the issuance of the 4.875% Senior Notes, the Company repurchased approximately $121.1 million of its 7.625% Senior Notes on March 18, 2013 in a tender offer at a price of 102.792% of the principal amount, which included an early tender payment of $30.00 per $1,000 principal amount of notes tendered. The holders of the tendered 7.625% Senior Notes also received accrued interest from the most recent interest payment date to, but not including, the date of repurchase. In addition, on March 29, 2013, the Company redeemed the remaining outstanding $28.9 million aggregate principal amount of the 7.625% Senior Notes in accordance with their terms at a price of 102.542% of the principal amount plus accrued interest from the most recent interest payment date to, but not including, the date of redemption. A pre-tax debt extinguishment loss of $5.6 million was recognized during the year ended December 31, 2013 in connection with the repurchase and redemption of the 7.625% Senior Notes, including $4.1 million of early payment premiums and $1.5 million of unamortized deferred financing costs. This loss was separately disclosed within the consolidated statements of operations.

Senior Convertible Notes

The Company’s 4.25% Convertible Notes matured and were converted in December 2014. The Company paid an aggregate of $97 million in cash and issued an aggregate of 2.4 million shares of its common stock to settle the 4.25% Convertible Notes in accordance with their respective terms. The value of the shares issued to settle the 4.25% Convertible Notes was $41.0 million, based on the closing price of the Company’s common stock on the date the shares were issued. Additionally, the Company’s 4.0% Convertible Notes matured and were converted in June 2014. The Company paid an aggregate of $105 million in cash and issued an aggregate of 4.2 million shares of its common stock to settle the 4.0% Convertible Notes in accordance with their respective terms. The value of the shares issued to settle the 4.0% Convertible Notes was $114.8 million, based on the closing price of the Company’s common stock on the date the shares were issued. The shares issued in settlement of the Convertible Notes were issued from the Company’s treasury stock.

Acquisition Debt

In connection with certain acquisitions, the Company has entered into or assumed certain debt and/or capital lease obligations. As of December 31, 2015 and 2014, $9.8 million and $20.2 million, respectively, of acquisition-related debt remained outstanding.

Debt Covenants

MasTec was in compliance with the provisions and covenants contained in its outstanding debt instruments as of December 31, 2015 and 2014.

Contractual Maturities of Debt and Capital Lease Obligations

Contractual maturities of MasTec’s debt and capital lease obligations as of December 31, 2015 were as follows (in millions):



2016	$	77.7
2017	60.2
2018	265.6
2019	219.2
2020	0.4
Thereafter	400.1
Total	$	1,023.2

Interest Expense, Net

The following table provides details of interest expense, net, for the periods indicated (in millions):



	For the Years Ended December 31,
	2015			2014			2013
Interest expense:
Contractual and other interest expense ^(a)	$	45.8		$	43.5		$	37.6
Accretion of senior convertible note discount	—			4.0			5.2
Amortization of deferred financing costs	2.9			3.4			4.0
Total interest expense	$	48.7		$	50.9		$	46.8
Interest income	(0.6		)	(0.1		)	(0.4		)
Interest expense, net	$	48.1		$	50.8		$	46.4


(a)	Contractual and other interest expense for the year ended December 31, 2015 includes $0.8 million of consent solicitation agent fees related to the delay in filing of the Company’s 2014 Form 10-K and its First Quarter 2015 Form 10-Q, as well as $1.6 million of discount fees related to financing arrangements.

As of December 31, 2015 and 2014, accrued interest payable, which is recorded within other accrued expenses in the consolidated balance sheets, totaled $7.7 million, and $7.4 million, respectively.