Borrowings and Other Obligations

9 Months Ended

Sep. 30, 2021


(Dollars in millions)	9/30/2021		12/31/2020




Current Portion of Exit Notes and Finance Lease	$	211	$	9
Other Short-term Financing Arrangements	—		4

Short-term Borrowings	$	211	$	13

Exit Notes	$	1,898	$	2,098
2028 Senior Secured Notes	488		—
2024 Senior Secured Notes	—		455
Finance Lease Long-term Portion	45		48
Long-term Debt	$	2,431	$	2,601

Exit Notes

Upon our emergence from bankruptcy on December 13, 2019, we entered into an indenture and issued unsecured 11.00% Exit Notes in an aggregate principal amount of $2.1 billion maturing on December 1, 2024 (the “Exit Notes”). Interest on the Exit Notes accrues at the rate of 11.00% per annum and is payable semiannually in arrears on June 1 and December 1, which commenced on June 1, 2020. As of September 30, 2021, $200 million of the Exit Notes were classified as a current obligation. On October 20, 2021 we redeemed $200 million of our Exit Notes and paid related accrued interest of $8 million along with a bond redemption premium of $6 million. See “Note 14 – Subsequent Events” for additional details.

2024 Senior Secured Notes

On August 28, 2020, we entered into an indenture and issued the 8.75% Senior Secured Notes in an aggregate principal amount of $500 million maturing September 1, 2024 (the “2024 Senior Secured Notes”). Interest accrued at the rate of 8.75% per annum and was payable semiannually in arrears on March 1 and September 1, which commenced on March 1, 2021. On September 30, 2021, we repaid our 2024 Senior Secured Notes and accrued interest with proceeds from the issuance of the 2028 Senior Secured Notes described below and cash on hand. In addition, we paid and recognized a $22 million bond redemption premium and recognized a $37 million noncash loss on extinguishment of debt related to the unamortized debt issuance costs and discount, which is presented as “Loss on Extinguishment of Debt and Bond Redemption Premium” on the Condensed Consolidated Statements of Operations.

2028 Senior Secured Notes

On September 30, 2021, we entered into an indenture and issued the 6.5% Senior Secured Notes in aggregate principal amount of $500 million maturing September 15, 2028 (the “2028 Senior Secured Notes”). Interest accrues at the rate of 6.5% per annum and is payable semiannually on September 15 and March 15 of each year, commencing on March 15, 2022. The 2028 Senior Secured Notes are guaranteed by the Company and the same subsidiaries of the Company that guaranteed the 2024 Senior Secured Notes. On September 30, 2021 we received $491 million of proceeds net of debt issuance costs paid and the net book value after including accrued debt issuance costs was $488 million. Debt issuance costs will be amortized to “Interest Expense, Net” on the Condensed Consolidated Financial Statements using the effective interest rate method over the term of the debt.

LC Credit Agreement

We have a senior secured letter of credit agreement in an aggregate amount of $215 million maturing on May 29, 2024 (the “LC Credit Agreement”), which is used by the Company and certain of its subsidiaries for the issuance of bid and performance letters of credit.

On September 20, 2021, certain provisions and covenants of the LC Credit Agreement were amended as follows:

•Permit the borrowing of up to an additional $400 million of secured indebtedness under an asset-based lending facility or a revolving credit facility upon compliance with certain conditions;

•Removed the minimum secured liquidity requirement;

•Increased the minimum aggregate liquidity requirement from $175 million to $300 million;

•Decreased the minimum aggregate book value of certain pledged assets requirement from $1.25 billion to $1 billion; and

•Increased the ability to repay or redeem debt to $500 million subject to minimum aggregate liquidity of $400 million at the time of repayment or redemption.

At September 30, 2021, we had approximately $173 million in outstanding letters of credit under the LC Credit Agreement and availability of $42 million.

As of September 30, 2021, we had $329 million of letters of credit outstanding, consisting of the $173 million mentioned above under the LC Credit Agreement and another $156 million under various uncommitted bi-lateral facilities (for which there was $152 million in cash collateral held and recorded in “Restricted Cash” on our Condensed Consolidated Balance Sheets).

Accrued Interest

As of September 30, 2021 and December 31, 2020, we had accrued interest of $77 million and $34 million, respectively, in “Other Current Liabilities” on our Condensed Consolidated Balance Sheets.

Fair Value of Short and Long-term Borrowings

The carrying value of our short-term borrowings approximates their fair value due to their short maturities. These short-term borrowings are classified as Level 2 in the fair value hierarchy.

The fair value of our long-term debt fluctuates with changes in applicable interest rates among other factors. Fair value will exceed carrying value when the current market interest rate is lower than the interest rate at which the debt was originally issued and will be less than the carrying value when the market rate is greater than the interest rate at which the debt was originally issued. The fair value of our long-term debt is classified as Level 2 in the fair value hierarchy and is established based on observable inputs in less active markets. The table below presents the fair value and carrying value of the Exit Notes and Senior Secured Notes.


	9/30/2021				12/31/2020
(Dollars in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
Exit Notes	$	2,098	$	2,215	$	2,098	$	1,628
2028 Senior Secured Notes	$	488	$	516	$	—	$	—
2024 Senior Secured Notes	$	—	$	—	$	455	$	507