Debt

12 Months Ended

Dec. 31, 2021

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


		December 31,
Description	Maturity Date	2021		2020
Senior credit facility:	November 1, 2026
Revolving loans		$	772.3	$	32.7
Term loan		350.0		397.5
4.50% Senior Notes	August 15, 2028	600.0		600.0
Finance lease and other obligations		310.3		288.5
Total debt obligations		$	2,032.6	$	1,318.7
Less unamortized deferred financing costs		(18.5)		(16.0)
Total debt, net of deferred financing costs		$	2,014.1	$	1,302.7
Current portion of long-term debt		137.9		145.1
Long-term debt		$	1,876.2	$	1,157.6

Senior Credit Facility

On November 1, 2021, the Company refunded and replaced its senior secured credit facility with a senior unsecured credit facility (the “replacement Credit Facility”). The replacement Credit Facility, among other items, extended the maturity of the senior secured credit facility from September 19, 2024 to November 1, 2026, and increased total commitments from $1.75 billion to $2.0 billion, which amount is composed of $1.65 billion of revolving commitments and a term loan with an original principal amount of $350 million (the “Term Loan”), which amount was drawn as of the closing of the replacement Credit Facility. The Term Loan is subject to amortization in quarterly principal installments of approximately $2.2 million commencing in March 2023, which quarterly installments increase to approximately $4.4 million in March 2025 until maturity. Quarterly principal installments on the Term Loan are subject to adjustment, if applicable, for certain prepayments. The replacement of the credit facility was evaluated in accordance with ASC 470-50, Debt - Modifications and Extinguishments and determined to be a debt modification. In making this determination, the Company considered whether the lenders within the syndicate remained the same or changed and whether the changes in debt terms were substantial. With exception for an immaterial amount of debt issuance costs that were written off, the debt issuance costs associated with the Company’s previous credit facility, together with the $6 million of newly incurred debt issuance costs, will be amortized over the remaining term of the replacement Credit Facility.

The replacement Credit Facility allows the Company to borrow up to an aggregate equivalent amount of $300 million in revolving advances either in Canadian dollars and/or Mexican pesos. The maximum amount available for letters of credit under the replacement Credit Facility is $650 million, of which up to $200 million can be denominated in either Canadian dollars and/or Mexican pesos. The replacement 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, as defined in the replacement Credit Facility. Subject to certain limitations described in the replacement Credit Facility, these additional term loan tranches may have terms and pricing that differ from the replacement Credit Facility.

Borrowings under the replacement Credit Facility are used for working capital requirements, capital expenditures and other corporate purposes, including potential acquisitions, equity investments or other strategic arrangements, the repurchase or prepayment of indebtedness, including repayment of term loans and potential share repurchases.

Outstanding revolving loans and the Term Loan under the replacement Credit Facility bear interest, at the Company’s option, at a rate equal to either (a) a Eurocurrency Rate, as defined in the replacement Credit Facility, plus a margin of 1.125% to 1.625% (under the senior secured credit facility, the margin was from 1.25% to 1.75%), or (b) a Base Rate, as defined in the replacement Credit Facility, plus a margin of 0.125% to 0.625% (under the senior secured credit facility, the margin was from 0.25% to 0.75%). The Base Rate equals the highest of (i) the Federal Funds Rate, as defined in the replacement 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 replacement Credit Facility are subject to a letter of credit fee of 1.125% to 1.625% (under the senior secured credit facility, the letter of credit fee was from 1.25% to 1.75%), and performance standby letters of credit issued under the replacement Credit Facility are subject to a letter of credit fee of 0.3125% to 0.6875% (under the senior secured credit facility, the letter of credit fee was from 0.375% to 0.75%). The Company must also pay a commitment fee to the lenders of 0.150% to 0.225% (under the senior secured credit facility, the commitment fee was from 0.20% to 0.30%) on any unused availability under the replacement 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 replacement Credit Facility, as of the then most recent fiscal quarter.

As of December 31, 2021 and 2020, outstanding revolving loans, which included $32 million and $33 million, respectively, of borrowings denominated in foreign currencies, accrued interest at weighted average rates of approximately 2.32% and 1.87% per annum, respectively. The term loan accrued interest at a rate of 1.35% and 1.40% as of December 31, 2021 and 2020, respectively. Letters of credit of approximately $166.3 million and $133.6 million were issued as of December 31, 2021 and 2020, respectively. As of December 31, 2021 and 2020, fees for performance standby letters of credit accrued at 0.4375% and 0.375% per annum, respectively, and fees for financial standby letters of credit accrued at 1.250% per annum as of both December 31, 2021 and 2020. Outstanding letters of credit mature at various dates and most have automatic renewal provisions, subject to prior notice of cancellation. As of December 31, 2021 and 2020, availability for revolving loans totaled $0.7 billion and $1.2 billion, respectively, or up to $483.7 million and $516.4 million, respectively, for new letters of credit. Revolving loan borrowing capacity included $267.7 million and $267.3 million of availability in either Canadian dollars or Mexican pesos as of December 31, 2021 and 2020, respectively. The unused facility fee as of December 31, 2021 and 2020 accrued at a rate of 0.175% and 0.20%, respectively.

The replacement Credit Facility is guaranteed by certain subsidiaries of the Company (the “Guarantor Subsidiaries”) and the obligations under the replacement Credit Facility are not secured. Under the replacement Credit Facility, if the Loan Party EBITDA, as defined in the replacement Credit Facility, as of the last four consecutive fiscal quarters does not represent at least 80% of the Adjusted Consolidated EBITDA for such period, as defined in the replacement Credit Facility, then the Company must cause additional subsidiaries to become Guarantor Subsidiaries. Additionally, any domestic subsidiary with consolidated EBITDA of at least 15% of Adjusted Consolidated EBITDA, as defined in the replacement Credit Facility, must become a Guarantor Subsidiary and join the applicable guaranty agreements.

The replacement Credit Facility requires that the Company maintain a maximum Consolidated Leverage Ratio, as defined in the replacement Credit Facility, of not more than 3.50 as of the end of any fiscal quarter (subject to the Acquisition Adjustment described below). The replacement Credit Facility also requires that the Company maintain a minimum Consolidated Interest Coverage Ratio, as defined in the replacement Credit Facility, of at least 3.00. Additionally, subject to certain conditions, if a Permitted Acquisition, as defined in the replacement 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 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 replacement Credit Facility. Subject to customary exceptions, the replacement Credit Facility limits the Company’s ability to engage in certain activities, including, but not limited to, acquisitions, mergers and consolidations, debt incurrence, investments, asset sales, debt prepayments, lien incurrence and the making of distributions or repurchases of the Company’s capital stock. However, distributions payable solely in common stock are permitted. The replacement 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.

4.50% Senior Notes

On August 4, 2020, the Company issued $600 million aggregate principal amount of senior unsecured notes due August 15, 2028, which bear interest at a rate of 4.50% (the “4.50% Senior Notes”), at par in a private offering (the “Private Offering”). Interest on the 4.50% Senior Notes is payable semiannually in arrears on February 15 and August 15 of each year, beginning on February 15, 2021. The 4.50% Senior Notes are general senior unsecured obligations of the Company, and rank equal in right of payment with all of the Company’s existing and future senior unsecured indebtedness and senior in right of payment to all of the Company’s existing and future subordinated indebtedness. The 4.50% Senior Notes are effectively subordinated to all secured indebtedness of the Company to the extent of the value of the assets securing such indebtedness. The 4.50% Senior Notes are fully and unconditionally guaranteed on a senior unsecured, joint and several basis by the Company’s wholly-owned domestic restricted subsidiaries that guarantee its existing credit facilities, subject to certain exceptions.

The Company used a portion of the proceeds from the Private Offering to redeem all $400 million of its outstanding 4.875% Senior Notes due 2023 (the “4.875% Senior Notes”) on August 19, 2020 (the “Redemption Date”) at a redemption price equal to 100.813% of the principal amount of the 4.875% Senior Notes redeemed, plus accrued and unpaid interest to, but not including, the Redemption Date. The remaining net proceeds from the Private Offering were primarily used to repay revolving loans under the Company’s existing credit facilities.

The Company has the option to redeem all or a portion of the 4.50% Senior Notes at any time on or after August 15, 2023 at the redemption prices specified in the indenture that governs the 4.50% Senior Notes (the “4.50% Senior Notes Indenture”), plus accrued and unpaid interest, if any, to (but excluding) the redemption date. In addition, at any time prior to August 15, 2023, the Company may redeem all or a part of the 4.50% Senior Notes at a redemption price equal to 100% of the principal amount of the 4.50% Senior Notes redeemed, plus accrued and unpaid interest, if any, to

(but excluding) the redemption date, plus a “make-whole” premium. Further, prior to August 15, 2023, the Company may redeem up to 40% of the aggregate principal amount of the 4.50% Senior Notes using the net cash proceeds of certain equity offerings, at a redemption price equal to 104.500% of the principal amount of the 4.50% Senior Notes redeemed, plus accrued and unpaid interest, if any, to (but excluding) the date of redemption, subject to certain conditions.

If the Company undergoes a change of control, as defined in the 4.50% Senior Notes Indenture, the Company must make an offer to repurchase all of the 4.50% Senior Notes then outstanding at a price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to (but excluding) the date of repurchase.

The 4.50% Senior Notes Indenture, among other things, generally limits the ability of the Company and certain of its subsidiaries, subject to certain exceptions, to (i) create liens, (ii) pay dividends, (iii) acquire shares of capital stock, (iv) make certain investments and (v) effect mergers. The 4.50% Senior Notes Indenture provides for customary events of default, subject to customary grace and cure periods. Generally, if an event of default occurs and is continuing, the trustee or holders of at least 30% of the 4.50% Senior Notes then outstanding may declare the principal of, premium, if any, and accrued interest on all of the 4.50% Senior Notes immediately due and payable. Financing costs incurred in connection with the issuance of the 4.50% Senior Notes totaled approximately $8.9 million. These deferred financing costs, which are reflected as a reduction of the carrying amount of the 4.50% Senior Notes, will be amortized over the term of the 4.50% Senior Notes using the effective interest method.

Management determined that the repurchase and redemption of the Company’s 4.875% Senior Notes should be accounted for as a debt extinguishment and recorded a pre-tax debt extinguishment loss of approximately $5.6 million for the year ended December 31, 2020, including $3.3 million of early repayment premiums and $2.3 million of unamortized deferred financing costs. This loss is separately disclosed within the Company’s consolidated statements of operations.

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. Borrowings under the Company’s foreign credit facilities, which have varying dates of maturity and are generally renewed on an annual basis, are denominated in Canadian dollars. Maximum borrowing capacity under these credit facilities totaled Canadian $20.0 million as of both December 31, 2021 and 2020, or approximately $15.8 million and $15.7 million, respectively. As of both December 31, 2021 and 2020, there were no outstanding borrowings. Outstanding borrowings that are not renewed are repaid with borrowings under the replacement Credit Facility. Accordingly, the carrying amounts of the Company’s borrowings under its other credit facilities, if any, are included within other debt obligations in the table above and classified within long-term debt in the Company’s consolidated balance sheets. Additionally, the Company has a separate credit facility, which is renewable on an annual basis, under which it may issue up to $50.0 million of performance standby letters of credit. As of December 31, 2021 and 2020, letters of credit issued under this facility totaled $22.2 million and $18.2 million, respectively, and accrued fees at 0.40% and 0.50% per annum, respectively. The Company’s other credit facilities are subject to customary provisions and covenants.

Debt Covenants

MasTec was in compliance with the provisions and covenants of its outstanding debt instruments as of both December 31, 2021 and 2020.

Contractual Maturities of Debt

Contractual maturities of MasTec’s debt, which includes finance lease obligations, as of December 31, 2021 were as follows (in millions):


2022	$	137.9
2023	96.9
2024	57.6
2025	36.9
2026	1,103.3
Thereafter	600.0
Total	$	2,032.6

As of December 31, 2021 and 2020, accrued interest payable, which is recorded within other accrued expenses in the consolidated balance sheets, totaled $11.7 million and $12.4 million, respectively.