Debt

Listed below are our debt obligations as of the periods presented:



	Interest Rate		December 31, 2019			December 31, 2018
			(in millions)
Prepetition RBL credit facility - due November 23, 2021⁽¹⁾	Variable		$	315		$	100
Senior secured term loans:
2.0 Lien due April 30, 2019⁽²⁾	Variable		—			8
Senior secured notes:
1.5 Lien due May 1, 2024	9.375	%	1,092			1,092
1.25 Lien due November 29, 2024	8.00	%	500			500
1.5 Lien due February 15, 2025	8.00	%	1,000			1,000
1.125 Lien due May 15, 2026	7.75	%	1,000			1,000
Senior unsecured notes:
Due May 1, 2020	9.375	%	182			232
Due September 1, 2022	7.75	%	182			182
Due June 15, 2023	6.375	%	324			324
Unamortized discount and debt issue costs⁽³⁾			—			(95		)
Total debt			4,595			4,343
Current portion of long-term debt⁽³⁾			(1,815		)	(58		)
Amounts reclassified as liabilities subject to compromise⁽⁴⁾			(2,780		)	—
Total long-term debt			$	—		$	4,285

Debtor-in-possession facility	Variable		$	148		$	—


(1)	Carries interest at a specified margin over LIBOR of 2.50% to 3.50%, based on borrowing utilization and 0.375% commitment fee on unused capacity. Such margins will fluctuate based on the utilization of the facility.


(2)	Carries interest at a specified margin over the LIBOR of 3.50%, with a minimum LIBOR floor of 1.00%. As of December 31, 2018, the effective interest rate for the term loan was 6.21%. In April 2019, we retired the note in full.


(3)	Due to uncertainties at September 30, 2019 regarding default, event of default and cross-default provisions under our indentures and RBL Facility, we reclassified our debt as current and wrote off approximately $90 million in unamortized debt discount and debt issue costs in the third quarter 2019. Amounts written off are included in interest expense in the consolidated statement of operations.

(4)

As a result of the Chapter 11 Cases, the principal balance on the 1.5 lien notes and senior unsecured notes of approximately $2,092 million and $688 million, respectively, has been reclassified as liabilities subject to compromise as of December 31, 2019. In addition, accrued and unpaid interest of approximately $117 million related to the 1.5 lien notes and senior unsecured notes has been reclassified from accrued liabilities to liabilities subject to compromise as of December 31, 2019. For a further discussion of the Chapter 11 Cases, see Note 1A.

Gain on extinguishment/modification of debt. During 2018, we completed an exchange of approximately $1.1 billion of certain senior unsecured notes for new 1.5 Lien Notes maturing in 2024. The exchange transaction was accounted for as a modification of debt and an extinguishment of debt depending on the senior unsecured notes exchanged. In conjunction with the exchange, we recorded a $12 million loss on debt considered modified for accounting purposes and a net gain of $53 million on debt considered extinguished for accounting purposes.

Additionally, during the year ended December 31, 2019 and 2018, we recorded a net gain on extinguishment/modification of debt of $10 million and $32 million, respectively, primarily related to repurchased debt. In the first quarter of 2019, we paid approximately $40 million in cash to repurchase a total of $50 million in aggregate principal amount of our senior unsecured notes due 2020. In 2018, we paid approximately $49 million in cash to repurchase a total of approximately $84 million in aggregate principal amount of our senior unsecured notes due 2022 and 2023.

Covenant Violations and Chapter 11 Cases. On August 15, 2019, we did not make the approximately $40 million cash interest payment due with respect to the 2025 1.5 Lien Notes. On September 3, 2019, we did not make the approximately $7 million cash interest payment due with respect to the 2022 Unsecured Notes. Our failure to make these interest payments within thirty days after they were due and payable resulted in an event of default under the respective indentures governing the 2025 1.5 Lien Notes and 2022 Unsecured Notes. Each event of default under the indentures noted above also resulted in a cross-default under the RBL Facility.

On September 14, 2019, we entered into forbearance agreements, extending through October 3, 2019, with the Noteholders and the RBL Forbearing Parties, pursuant to which each Noteholder and RBL Forbearing Party temporarily agreed, subject to certain terms and conditions, to forbear from exercising any rights or remedies they may have in respect of the failure to make the approximately $40 million cash interest payment.

On October 3, 2019, the Debtors filed the Chapter 11 Cases in the Bankruptcy Court seeking relief under the Bankruptcy Code. The commencement of the Chapter 11 Cases constituted an immediate event of default, and caused the automatic and immediate acceleration of all debt outstanding under or in respect of a number of our instruments and agreements relating to our direct financial obligations, including the RBL Facility and indentures governing the Senior Notes. Any efforts to enforce such payment obligations were automatically stayed as a result of the filing of the Chapter 11 Cases and the creditors’ rights of enforcement in respect of the Senior Notes and the RBL Facility are subject to the applicable provisions of the Bankruptcy Code. For a further discussion of the Chapter 11 Cases, see Note 1A.

Debtor-in-possession financing. As noted in Note 1A, on November 25, 2019, EPE Acquisition, LLC and EP Energy LLC entered into a Senior Secured Superpriority Debtor-In-Possession Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, collateral agent and an issuing bank and the RBL Lenders which are party thereto as lenders (as amended or modified from time to time, the “DIP Credit Agreement”). Under the DIP Credit Agreement and the order of the Bankruptcy Court entered on November 25, 2019 (the “DIP Order”), a portion of the RBL Facility was converted into commitments under the DIP Credit Agreement which provides for an approximately $315 million debtor-in-possession senior secured superpriority revolving credit facility, and which includes a letter of credit sublimit of $50 million. As of December 31, 2019, we had $150 million capacity remaining with approximately $17 million of letters of credit issued and $148 million outstanding under the DIP Facility.

EP Energy LLC will use the proceeds of the DIP Facility for, among other things, (i) the acquisition, development and exploration of oil and gas properties, for working capital and general corporate purposes, (ii) the payment of professional fees as provided for in the DIP Order, (iii) the payment of expenses incurred in the administration of the Chapter 11 Cases or as permitted by the certain orders and (iv) payments due thereunder or under the DIP Order. The maturity date of the DIP Facility is the earlier of (a) November 25, 2020, (b) the effective date of an “Acceptable Plan of Reorganization” (as defined in the DIP Credit Agreement), (c) the closing of a sale of substantially all of the equity or assets of EP Energy LLC (unless consummated pursuant to an Acceptable Plan of Reorganization), or (d) the termination of the DIP Facility during the continuation of an event of default thereunder.

The DIP Loans bear interest at a rate per annum equal to (i) adjusted LIBOR plus an applicable margin of 3.50% or (ii) an alternative base rate plus an applicable margin of 2.50%, in each case, as selected by EP Energy LLC. Any unused revolving commitments will be subject to a commitment fee at a rate per annum equal to 0.50% on the Available Commitment (as defined in the DIP Credit Agreement) in effect on such day. The DIP Facility is secured by a senior secured superpriority perfected security interest on substantially all assets of EP Energy LLC and any subsidiary guarantors. The security interests and liens are further subject to certain carve-outs and permitted liens, as set forth in the DIP Credit Agreement and the DIP Order.

On March 12, 2020, EP Energy LLC, EPE Acquisition, LLC, the agent and certain of the lenders under the RBL Facility, the DIP Agent and certain of the DIP Lenders entered into that certain Waiver of Credit Agreements which waived the occurrence of any event of default triggered under the RBL Credit Agreement and the DIP Credit Agreement as a result of a going concern or like qualification or exception to the audited financials for the year ending December 31, 2019.

Exit Facility. The Debtors have received an underwritten commitment from the DIP Lenders to convert their DIP Loans and their remaining claims under the RBL Facility into an approximately $629 million exit senior secured reserve-based revolving credit facility (the “Exit Facility”) subject to certain conditions set forth therein, which will be evidenced by a senior secured revolving credit agreement, by and among EP Energy LLC, as borrower, EPE Acquisition, LLC, as holdings, the lenders party thereto from time to time, and JPMorgan Chase Bank, N.A., as administrative agent, collateral agent and an issuing bank.