DEBT

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

DEBT

NOTE 14. DEBT

The following table presents information about the Company’s total indebtedness at March 31, 2023 and December 31, 2022 (dollars in thousands):

	March 31, 2023						December 31, 2022
	Effective Interest Rate (1)		Principal Amount (2)		Carrying Amount (2)		Effective Interest Rate (1)		Principal Amount (2)		Carrying Amount (2)
5.375% Senior Notes due 2023	5.38	%	$	6,127	$	6,127	5.38	%	$	6,127	$	6,127
6.00% Senior Notes due 2023	6.00	%	56,436		56,436		6.00	%	56,436		56,436
5.875% Senior Secured Notes due 2024	6.88	%	300,000		281,219		6.88	%	300,000		286,375
6.00% Senior Notes due 2025	6.00	%	21,578		21,578		6.00	%	21,578		21,578
7.50% Senior Secured Notes due 2027	8.50	%	2,015,479		1,851,945		8.50	%	2,015,479		1,894,774
9.50% Senior Secured Second Lien Notes due 2027	9.50	%	940,590		940,590		9.50	%	940,590		940,590
6.00% Senior Notes due 2028	6.00	%	1,260,416		1,260,416		6.00	%	1,260,416		1,260,416
6.125% Senior Secured Notes due 2029	7.13	%	1,295,000		1,207,732		7.13	%	1,295,000		1,230,799
Term Loan Facility	14.00	%	1,975,000		1,807,463		13.50	%	1,975,000		1,871,894
Revolving Credit Facility	11.50	%	277,200		258,337		11.00	%	277,200		265,728
Total (3)			$	8,147,826	$	7,691,843			$	8,147,826	$	7,834,717

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(1)Beginning on the Petition Date, we ceased recognition of interest expense related to all of our debt instruments and began to incur “adequate protection payments” related to our First Lien Debt Instruments (representing all of our debt instruments except for our senior unsecured notes and the 9.50% Senior Secured Second Lien Notes due 2027). The March 31, 2023 and December 31, 2022 “effective interest rates” included in the table above represent the rates in effect on such dates used to calculate: (i) future adequate protection payments related to our First Lien Debt Instruments and (ii) future contractual interest related to our other debt instruments, notwithstanding the fact that such interest is not currently being recognized. These rates are expressed as a percentage of the contractual principal amounts outstanding as of such date and, with respect to our First Lien Debt Instruments, without consideration of any reductions related to adequate protection payments made through such date.

(2)The March 31, 2023 and December 31, 2022 principal amounts represent the amount of unpaid contractual principal owed on the respective instruments. During the third quarter of 2022, in accordance with ASC 852, we adjusted the carrying amounts of all unsecured and potentially undersecured debt instruments to equal the expected amount of the allowed claim by expensing (within Reorganization items, net in the Condensed Consolidated Statements of Operations) $89.2 million of previously deferred and unamortized costs associated with these instruments. The March 31, 2023 and December 31, 2022 carrying amounts of our First Lien Debt Instruments also reflect reductions for certain adequate protection payments made since the Petition Date.

(3)As of March 31, 2023 and December 31, 2022, the entire carrying amount our debt, as well as any related remaining accrued and unpaid interest that existed as of the Petition Date, is included in the Liabilities subject to compromise line in the Condensed Consolidated Balance Sheets.

General Information

The aggregate estimated fair value of the Company’s long-term debt, which was estimated using inputs based on quoted market prices for the same or similar debt issuances, was $4.7 billion and $4.9 billion at March 31, 2023 and December 31, 2022, respectively. Based on this valuation methodology, we determined these debt instruments represent Level 2 measurements within the fair value hierarchy.

Credit Facilities

The Company and certain of its subsidiaries are party to the Credit Agreement, which, immediately following certain refinancing transactions that occurred in March 2021, provided for: (i) a $1,000.0 million senior secured revolving credit facility (the Revolving Credit Facility) and (ii) a $2,000.0 million senior secured term loan facility (the Term Loan Facility and, together with the Revolving Credit Facility, the Credit Facilities). Current amounts outstanding as of March 31, 2023 under the Credit Facilities are set forth in the table above.

Covenants, Events of Default and Bankruptcy-Related Matters

The agreements relating to our outstanding indebtedness contain certain covenants and events of default.

On the Petition Date, the Debtors filed voluntary petitions for relief under the Bankruptcy Code, which constituted an event of default that accelerated our obligations under substantially all of our then-outstanding debt instruments. However, section 362 of the Bankruptcy Code stays creditors from taking any action to enforce the related financial obligations and creditors’ rights of enforcement in respect of the debt instruments are subject to the applicable provisions of the Bankruptcy Code.

As a result of the Chapter 11 Cases, since the Petition Date, we have not made, and we are not currently making, any scheduled principal or interest payments on the Credit Facilities or our various senior notes and senior secured notes. We are however making certain adequate protection payments. Additionally, as a result of the Chapter 11 Cases, all remaining commitments under the Revolving Credit Facility have been terminated.

The transactions contemplated by the RSA are subject to approval by the Bankruptcy Court, among other conditions. Accordingly, no assurance can be given that the transactions described therein will be consummated. Because the Company has not yet obtained approval by the Bankruptcy Court regarding such transactions, there remains uncertainty with respect to the ability of our creditors, including our secured and unsecured debt holders, to recover the full amount of their claims against us. As a result, all secured and unsecured debt instruments have been classified as Liabilities subject to compromise in our Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022, and we ceased the recognition of interest expense related to these instruments as of the Petition Date. During the three months ended March 31, 2023, we did not recognize approximately $155 million of contractual interest expense that would have been recognized if not for the Chapter 11 Cases.

Pursuant to the Cash Collateral Order that is further discussed in Note 2. Bankruptcy Proceedings, we are, among other things, obligated to make certain adequate protection payments during our bankruptcy proceedings on each of our First Lien Debt Instruments. On a cumulative basis through March 31, 2023, we made the following adequate protection payments pursuant to the Cash Collateral Order:

•$18.9 million with respect to the Revolving Credit Facility;

•$167.5 million with respect to the Term Loan Facility; and

•$269.6 million with respect to the applicable senior secured notes.

As required by ASC 852, these adequate protection payments are recorded as a reduction of the carrying amount of the respective First Lien Debt Instruments, which are classified as Liabilities subject to compromise. This accounting treatment is due to the aforementioned uncertainties with respect to the ultimate outcome of the bankruptcy proceedings, including the proposed Sale transaction, which in turn creates uncertainties surrounding the first lien debt holders’ ability to recover in full the amount of outstanding principal associated with those instruments. Some or all of the adequate protection payments may later be recharacterized as interest expense depending upon certain developments in the Chapter 11 Cases.

Debt Financing Transactions

Set forth below are certain disclosures relating to debt financing transactions that occurred during the three months ended March 31, 2023 or the year ended December 31, 2022. For additional disclosures relating to debt financing transactions that occurred during the year ended December 31, 2022, refer to Note 15. Debt in the Consolidated Financial Statements included in Part IV, Item 15 of the Annual Report.

January 2022 Senior Notes Repayments

The 7.25% Senior Notes due 2022 and the 5.75% Senior Notes due 2022 were repaid in January 2022.