Long-term Debt

Long-term Debt consisted of the following:



(Dollars in millions)	September 30, 2016		December 31, 2015
5.50% Senior Notes due 2016	$	—	$	350
6.35% Senior Notes due 2017	89		604
6.00% Senior Notes due 2018	66		498
9.625% Senior Notes due 2019	490		1,012
5.125% Senior Notes due 2020	363		768
5.875% Exchangeable Senior Notes due 2021	1,142		—
7.75% Senior Notes due 2021	738		—
4.50% Senior Notes due 2022	642		642
8.25% Senior Notes due 2023	738		—
6.50% Senior Notes due 2036	446		446
6.80% Senior Notes due 2037	255		255
7.00% Senior Notes due 2038	455		455
9.875% Senior Notes due 2039	245		245
6.75% Senior Notes due 2040	456		456
5.95% Senior Notes due 2042	368		368
Secured Term Loan due 2020	483		—
4.82% secured borrowing	6		9
Capital and other lease obligations	129		116
Other	8		29
Total Senior Notes and other debt	7,119		6,253
Less amounts due in one year	182		401
Long-term debt	$	6,937	$	5,852

Secured Term Loan Agreement

In the second quarter of 2016, we borrowed $500 million under the Term Loan Agreement. The interest rate under the Term Loan Agreement is variable and is determined by our leverage ratio as of the most recent fiscal quarter, as either (1) the one-month London Interbank Offered Rate (“LIBOR”) plus a variable margin rate ranging from 1.425% to 3.20% or (2) the alternate base rate plus the applicable margin ranging from 0.425% to 2.20%. For the quarter ended September 30, 2016, the interest rate for the Term Loan Agreement was LIBOR plus a margin rate of 1.425% and the interest rate for the Revolving Credit Agreement was LIBOR plus a margin rate of 1.925%. Beginning September 30, 2016, the Term Loan Agreement requires a principal repayment of $12.5 million on the last day of each quarter.

Exchangeable Senior Notes, Senior Notes and Tender Offers

We have issued various senior notes, all of which rank equally with our existing and future senior unsecured indebtedness, which have semi-annual interest payments and no sinking fund requirements.

Exchangeable Senior Notes

On June 7, 2016, we issued exchangeable notes with a par value of $1.265 billion and an interest rate of 5.875%. The notes have a conversion price of $7.74 per share and are exchangeable into a total of 163.4 million shares of the Company upon the occurrence of certain events or on or after January 1, 2021. The notes mature on July 1, 2021. We have the choice to settle the exchange of the notes in any combination of cash or shares. As of September 30, 2016, the if-converted value did not exceed the principal amount of the notes.

The exchange feature is reported with a carrying amount of $97 million in “Capital in Excess of Par Value” on the accompanying Condensed Consolidated Balance Sheets. The debt component of the exchangeable notes has been reported separately in “Long-term Debt” on the accompanying Condensed Consolidated Balance Sheets with a carrying value of $1.142 billion at September 30, 2016 net of remaining unamortized discount and debt issuance costs of $123 million. The discount on the debt component will be amortized over the remaining maturity of the exchangeable notes at an effective interest rate of 8.4%. During the third quarter of 2016, interest expense on the notes was $30 million, of which $24 million related to accrued interest and $6 million related to amortization of the discount.

Senior Notes

On June 17, 2016, we issued $750 million in aggregate principal amount of 7.75% senior notes due 2021 and $750 million in aggregate principal amount of 8.25% senior notes due 2023.

Tender Offers and Early Retirement of Senior Notes

We commenced a cash tender offer on June 1, 2016 (and amended the offer on June 8, 2016 and June 10, 2016), which included an early tender option with an early settlement date of June 17, 2016 and an expiration date of June 30, 2016 with a final settlement date of July 1, 2016 to repurchase a portion of our 6.35% senior notes due 2017, 6.00% senior notes due 2018, 9.625% senior notes due 2019, and 5.125% senior notes due 2020. On June 17, 2016, we settled the early tender offers in cash in the amount of $1.972 billion, retiring an aggregate face value of senior notes tendered of $1.869 billion and accrued interest of $27 million. We recognized a cumulative loss of $78 million on these transactions in “Bond Tender Premium, Net” on the accompanying Consolidated Statements of Operations. On June 30, 2016, we accepted additional tenders of $2 million of debt, which we settled in cash on July 1, 2016.

In the third quarter and the nine months of 2015, through a series of open market transactions, we repurchased certain of our 4.50% senior notes, 5.95% senior notes, 6.50% senior notes, 6.75% senior notes and 7.00% with a total book value of $236 million and $396 million, respectively. We recognized a cumulative gain of approximately $35 million and $47 million, respectively, on these transactions in “Other, Net” on the accompanying Consolidated Statements of Operations.