Long-Term Debt

9 Months Ended

Sep. 30, 2020

Long-term debt consists of the following (in millions):


	September 30, 2020		December 31, 2019
Term A Loan	$	1,164.1	$	1,203.1
Revolving Credit Facility	138.0		310.0
Senior Notes	1,000.0		—
Other	21.1		41.7
Total long-term debt principal	2,323.2		1,554.8
Less: current portion of long-term debt	(76.5)		(79.1)
Long-term debt before debt issuance costs and discount	2,246.7		1,475.7
Less: debt issuance costs and discount	(20.0)		(10.6)
Long-term debt, net of current portion	$	2,226.7	$	1,465.1

As of September 30, 2020, principal maturities, including payments related to our finance leases, are as follows (in millions):


2020 (remaining)	$	20.4
2021	72.3
2022	111.7
2023	1,118.8
2024	—
Thereafter	1,000.0
Total	$	2,323.2

Credit Agreement

On April 30, 2018, our indirect subsidiary, BKIS entered into an amended and restated credit and guaranty agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. as administrative agent, the guarantors party thereto, the other agents party thereto and the lenders party thereto.

The Credit Agreement provides for (i) a $1,250.0 million term loan A facility (the “Term A Loan”) and (ii) a $750.0 million revolving credit facility (the “Revolving Credit Facility” and, together with the Term A Loan, collectively, the “Facilities”), the proceeds of which were used to repay in full the previous term loan A facility, term loan B facility and revolving credit facility.

As of September 30, 2020, the interest rates on the Term A Loan and Revolving Credit Facility were based on the Eurodollar rate plus a margin of 125 basis points and were approximately 1.40% each. As of September 30, 2020, we had $612.0 million capacity on the Revolving Credit Facility and paid an unused commitment fee of 15 basis points.

The Facilities are guaranteed by all of BKIS’s wholly-owned domestic restricted subsidiaries and Black Knight Financial Services, LLC, a Delaware limited liability company and the direct parent company of BKIS, and are secured by associated collateral agreements that pledge a lien on substantially all of BKIS’s assets, including fixed assets and intangibles, and the assets of the guarantors, in each case, subject to customary exceptions.

Senior Notes

On August 26, 2020, BKIS completed the issuance and sale of $1.0 billion aggregate principal amount of 3.625% senior unsecured notes due 2028 (the "Senior Notes"). The Senior Notes have a coupon rate of 3.625% and mature on September 1, 2028. Interest is paid semi-annually in arrears on September 1 and March 1 of each year, commencing March 1, 2021. The obligations under the Senior Notes are fully and unconditionally guaranteed, jointly and severally, on an unsecured basis by the same guarantors that guarantee the Credit Agreement (collectively, the “Guarantors”). The Senior Notes are effectively subordinated to any obligations that are secured, including obligations under the Credit Agreement, to the extent of the value of the assets securing those obligations. The Senior Notes are structurally subordinated to all liabilities of BKIS' subsidiaries that

do not guarantee the Senior Notes. The net proceeds of the offering, along with cash on hand and contributions from Cannae and THL, were used to partially finance the acquisition of Optimal Blue.

The Senior Notes were issued pursuant to an indenture (the “Indenture”), dated as of August 26, 2020, between BKIS, the Guarantors and Wells Fargo Bank, National Association, as trustee. BKIS may redeem up to 40% of the Senior Notes using the proceeds of certain equity offerings completed before September 1, 2023 at a redemption price equal to 103.625% of their principal amount plus accrued and unpaid interest, if any, up to, but not including the redemption date. In addition, at any time prior to September 1, 2023, BKIS may redeem some or all of the Senior Notes at a price equal to 100% of their principal amount, plus accrued and unpaid interest, if any, up to, but not including, the redemption date, plus the “make-whole” premium. Thereafter, BKIS may redeem the Senior Notes, in whole or in part, at the redemption prices set forth in the Indenture, plus accrued and unpaid interest, if any, up to, but not including, the redemption date. Upon the occurrence of certain events constituting a change of control, BKIS may be required to make an offer to repurchase the Senior Notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, up to, but not including, the date of purchase.

The Senior Notes are subject to customary covenants, including among others, customary events of default.

Other Debt

On April 1, 2018, we entered into a financing agreement for $32.9 million, with a stated interest rate of 0% and an imputed interest rate of 3.4%, primarily related to certain data processing and maintenance services. On December 31, 2019, we entered into an amendment to the financing agreement for an additional $16.3 million, with a stated interest rate of 0% and an imputed interest rate of 3.3%. Under the terms of the amendment, quarterly payments are due beginning January 2, 2020 through January 2, 2023. As of September 30, 2020, $9.4 million is included in the Current portion of debt and $6.3 million is included in Long-term debt, net of current portion in our Condensed Consolidated Balance Sheets (Unaudited).

Finance Leases

On December 31, 2019, we entered into one-year finance lease agreements, with a stated interest rate of 0%, an imputed interest rate of 3.3% and bargain purchase options for certain computer equipment. The leased equipment has a useful life of five years and is depreciated on a straight-line basis. The finance lease liabilities of $4.8 million as of September 30, 2020 are included in the Current portion of debt on our Condensed Consolidated Balance Sheets (Unaudited). For the nine months ended September 30, 2020, non-cash investing and financing activity was $4.8 million related to the unpaid portion of our finance lease agreements.

Fair Value of Long-Term Debt

The fair value of our Facilities approximates their carrying value at September 30, 2020. The fair value of our Facilities is based upon established market prices for the securities using Level 2 inputs. The fair value of our Senior Notes at September 30, 2020 was $1,013.9 million compared to its carrying value of $987.7 million.

Interest Rate Swaps

We enter into interest rate swap agreements to hedge forecasted monthly interest rate payments on our floating rate debt. As of September 30, 2020, we had the following interest rate swap agreements (collectively, the "Swap Agreements") (in millions):


Effective dates	Notional amount		Fixed rates
March 31, 2017 through March 31, 2022	$	200.0	2.08%
September 29, 2017 through September 30, 2021	$	200.0	1.69%
April 30, 2018 through April 30, 2023	$	250.0	2.61%
January 31, 2019 through January 31, 2023	$	300.0	2.65%

Under the terms of the Swap Agreements, we receive payments based on the 1-month London Interbank Offered Rate ("LIBOR") (approximately 0.15% as of September 30, 2020).

We entered into the Swap Agreements to convert a portion of the interest rate exposure on our floating rate debt from variable to fixed. We designated these Swap Agreements as cash flow hedges. A portion of the amount included in Accumulated other comprehensive loss is reclassified into Interest expense, net as a yield adjustment as interest is either paid or received on the hedged debt. The fair value of our Swap Agreements is based upon Level 2 inputs. We have considered our own credit risk and the credit risk of the counterparties when determining the fair value of our Swap Agreements.

It is our policy to execute such instruments with creditworthy banks and not to enter into derivative financial instruments for speculative purposes. We believe our interest rate swap counterparties will be able to fulfill their obligations under our agreements, and we believe we will have debt outstanding through the various expiration dates of the swaps such that the occurrence of future cash flow hedges remains probable.

The estimated fair values of our Swap Agreements are as follows (in millions):


Balance sheet accounts	September 30, 2020		December 31, 2019


Other current liabilities	$	3.1	$	—
Other non-current liabilities	$	40.0	$	21.9

A cumulative loss of $43.1 million ($32.2 million net of tax) and cumulative loss of $21.9 million ($16.4 million net of tax) is reflected in Accumulated other comprehensive loss as of September 30, 2020 and December 31, 2019, respectively. Below is a summary of the effect of derivative instruments on amounts recognized in Other comprehensive (loss) earnings ("OCE") on the accompanying Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited) (in millions):


	Three months ended September 30,
	2020				2019
	Amount of gain recognized in OCE		Amount of loss reclassified from Accumulated OCE into Net earnings		Amount of loss recognized in OCE		Amount of loss reclassified from Accumulated OCE into Net earnings
Swap agreements	$	0.1	$	3.9	$	(3.0)	$	0.1


	Nine months ended September 30,
	2020				2019
	Amount of loss recognized in OCE		Amount of loss reclassified from Accumulated OCE into Net earnings		Amount of loss recognized in OCE		Amount of gain reclassified from Accumulated OCE into Net earnings
Swap agreements	$	(24.1)	$	8.3	$	(21.0)	$	(0.9)

Approximately $21.0 million ($15.7 million net of tax) of the balance in Accumulated other comprehensive loss as of September 30, 2020 is expected to be reclassified into Interest expense, net over the next 12 months.