Debt

9 Months Ended

Sep. 30, 2019

Note 7 – Debt

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



Description	Maturity Date	September 30, 2019			December 31, 2018
Senior secured credit facility:	September 19, 2024
Revolving loans		$	251.1		$	456.9
Term loan		400.0			376.9
4.875% Senior Notes	March 15, 2023	400.0			400.0
Finance lease and other obligations		282.6			183.2
Total long-term debt obligations		$	1,333.7		$	1,417.0
Less unamortized deferred financing costs		(13.1		)	(10.1		)
Total debt, net of deferred financing costs		$	1,320.6		$	1,406.9
Current portion of long-term debt		99.5			82.7
Long-term debt		$	1,221.1		$	1,324.2

Senior Secured Credit Facility

The Company has a senior secured credit facility (the “Credit Facility”), which was amended and restated on September 19, 2019 (the “amended Credit Facility”). The amended Credit Facility, which has a maturity date of September 19, 2024, increased the Company’s aggregate borrowing commitments from approximately $1.5 billion to $1.75 billion as of September 30, 2019, which amount is composed of $1.35 billion of revolving commitments and a term loan in the aggregate principal amount of $400 million. As of September 30, 2019, term loans in the aggregate principal amount of $400 million were drawn under the amended Credit Facility. The term loan is subject to amortization in quarterly principal installments of $2.5 million commencing in December 2020, which amount will increase to $5.0 million commencing in December 2021. Quarterly principal installments on the term loan are subject to adjustment, if applicable, for certain prepayments.

The amended Credit Facility allows the Company to borrow either in Canadian dollars and/or Mexican pesos, up to an aggregate equivalent amount of $300 million. The maximum amount available for letters of credit under the amended Credit Facility is $650 million, of which up to $200 million can be denominated in either Canadian dollars and/or Mexican pesos. The amended Credit Facility also provides for swing line loans of up to $125 million, and, subject to certain conditions, the Company has the option to increase revolving commitments and/or establish additional term loan tranches equal to the Incremental Facilities Limit (as defined in the amended Credit Facility). Subject to the terms and conditions described in the amended Credit Facility, these additional term loan tranches may rank equal or junior in respect of right of payment and/or collateral to the amended Credit Facility, and may, subject to certain limitations in the amended Credit Facility, have terms that differ from the amended Credit Facility. Borrowings under the amended Credit Facility are used for working capital requirements, capital expenditures and other corporate purposes, including equity investments, potential acquisitions or other strategic arrangements, the repurchase or prepayment of indebtedness, share repurchases and repayment of the term loan under the Company’s previous Credit Facility.

Outstanding revolving loans and the term loan under the amended Credit Facility bear interest, at the Company’s option, at a rate equal to either (a) a Eurocurrency Rate, as defined in the amended Credit Facility, plus a margin of 1.25% to 1.75% (under the previous Credit Facility, the margin was from 1.25% to 2.00%), or (b) a Base Rate, as defined in the amended Credit Facility, plus a margin of 0.25% to 0.75% (under the previous Credit Facility the margin was 0.25% to 1.00%). The Base Rate equals the highest of (i) the Federal Funds Rate, as defined in the amended 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 amended Credit Facility are subject to a letter of credit fee of 1.25% to 1.75% (under the previous Credit Facility, the letter of credit fee was from 1.25% to 2.00%), and performance standby letters of credit issued under the amended Credit Facility are subject to a letter of credit fee of 0.375% to 0.75% (under the previous Credit Facility, the letter of credit fee was from 0.50% to 1.00%). The Company must also pay a commitment fee to the lenders of 0.20% to 0.30% on any unused availability under the amended Credit Facility (under the previous Credit Facility, the fee was from 0.20% to 0.40%). In each of the foregoing cases, the applicable margin or fee is based on the Company’s Consolidated Leverage Ratio, as defined in the amended Credit Facility, as of the then most recent fiscal quarter.

As of September 30, 2019 and December 31, 2018, outstanding revolving loans, which included $116 million and $128 million, respectively, of borrowings denominated in foreign currencies, accrued interest at weighted average rates of approximately 3.417% and 4.234% per annum, respectively. The term loan accrued interest at a rate of 3.419% and 4.272% as of September 30, 2019 and December 31, 2018, respectively. Letters of credit of approximately $102.2 million and $88.2 million were issued as of September 30, 2019 and December 31, 2018, respectively. As of September 30, 2019 and December 31, 2018, letter of credit fees accrued at 0.500% and 0.875% per annum, respectively, for performance standby letters of credit, and at 1.375% and 1.750% 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 September 30, 2019 and December 31, 2018, availability for revolving loans totaled $996.7 million and $554.9 million, respectively, or up to $547.8 million and $554.9 million, respectively, for new letters of credit. Revolving loan borrowing capacity included $183.9 million and $91.9 million of availability in either Canadian dollars or Mexican pesos as of September 30, 2019 and December 31, 2018, respectively. The unused facility fee as of September 30, 2019 and December 31, 2018 accrued at a rate of 0.225% and 0.350%, respectively.

The amended Credit Facility is guaranteed by certain subsidiaries of the Company (the “Guarantor Subsidiaries”) and the obligations under the amended Credit Facility are secured by substantially all of the Company’s and the Guarantor Subsidiaries’ respective assets, subject to certain exceptions. Under the amended Credit Facility, if the Loan Party EBITDA, as defined, as of the last four consecutive fiscal quarters does not represent

at least 80% of the Adjusted Consolidated EBITDA, as defined in the amended 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 amended 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.

The amended Credit Facility requires that the Company maintain a maximum Consolidated Leverage Ratio, as defined in the amended Credit Facility, of 3.50 times (subject to the Acquisition Adjustment described below). The amended Credit Facility also requires that the Company maintain a minimum Consolidated Interest Coverage Ratio, as defined in the amended Credit Facility, of 3.00 times. The amended Credit Facility provides that, for purposes of calculating the Consolidated Leverage Ratio, funded indebtedness excludes undrawn standby performance letters of credit and is further reduced by unrestricted cash over certain thresholds. Additionally, notwithstanding the terms discussed above, subject to certain conditions, if a Permitted Acquisition, as defined in the Credit Facility, or series of Permitted Acquisitions having consideration exceeding $100 million occurs during a fiscal quarter, the maximum Consolidated Leverage Ratio may be temporarily increased to up to 4.00 times during such fiscal quarter and the subsequent four fiscal quarters (the “Acquisition Adjustment”). Such right may be exercised no more than two times during the term of the amended Credit Facility. Subject to customary exceptions, the amended Credit Facility limits the Borrowers’ (as defined in the Credit Facility) and the Guarantor Subsidiaries’ ability to engage in certain activities, including acquisitions, mergers and consolidations, debt incurrence, investments, asset sales, debt prepayments, lien incurrence and the making of cash distributions or repurchases of the Company’s common stock. However, distributions payable solely in common stock are not restricted. The amended 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 amended Credit Facility obligations.

Other Credit Facilities. The Company has other credit facilities that support: (i) the working capital requirements of its foreign operations, and (ii) certain letter of credit issuances. As of both September 30, 2019 and December 31, 2018, there were no borrowings under the Company’s other credit facilities. Additionally, the Company has a credit facility under which it may issue up to $50.0 million of performance standby letters of credit. As of both September 30, 2019 and December 31, 2018, letters of credit issued under this facility totaled $40.2 million, and accrued fees at 0.50% and 0.75%, respectively, per annum. The Company’s other credit facilities are subject to customary provisions and covenants.

Debt Guarantees and Covenants

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 16 - Supplemental Guarantor Condensed Consolidating Financial Information.

MasTec was in compliance with the provisions and covenants of its outstanding debt instruments as of September 30, 2019 and December 31, 2018.

Additional Information

As of September 30, 2019 and December 31, 2018, accrued interest payable, which is recorded within other accrued expenses in the consolidated balance sheets, totaled $1.6 million and $7.4 million, respectively. For additional information pertaining to the Company’s debt instruments, including its 4.875% Senior Notes, see Note 7 - Debt in the Company’s 2018 Form 10-K.