Indebtedness

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Indebtedness

Note 14. Indebtedness

The following is a summary of indebtedness and lease financing obligations (in thousands):

	As of September 30, 2018			As of December 31, 2017
Current liabilities:
Term A loan	$	19,550		$	19,550
Term A-1 loan		62,500			62,500
Term B-3 loan		5,450			5,450
Lease finance obligation		1,003			870
Current obligations		88,503			88,370
Current deferred financing fees and debt discount		(4,718	)		(4,811	)
		83,785			83,559
Noncurrent liabilities:
Term A loan		351,900			366,562
Term A-1 loan		1,125,000			1,171,875
Term B-3 loan		531,375			535,463
Revolver		—			—
Lease finance obligation		60,258			61,032
Noncurrent obligations		2,068,533			2,134,932
Noncurrent deferred financing fees and debt discount		(15,160	)		(18,688	)
		2,053,373			2,116,244
Total	$	2,137,158		$	2,199,803

Senior Secured Credit Facilities

On December 20, 2017, the Company entered into a Fourth Amendment (the “Fourth Amendment”) to its Amended and Restated Credit Facility dated June 18, 2015, as previously amended on December 14, 2015, April 26, 2017, and October 17, 2017 (the “Credit Agreement”). The Fourth Amendment provided for a new Term B-3 Loan facility in the principal amount of $542.3 million, the proceeds of which (along with cash on hand) were used to repay in full the existing Term B Loan facility. Under the terms of the Fourth Amendment, the maturity date of the new Term B Loan facility remains April 26, 2024, but the new Term B Loan facility has an interest rate of LIBOR (as defined in the Credit Agreement) plus a percentage ranging from 2.00% to 2.25% for Eurocurrency Loans (as defined in the Credit Agreement) or the prime rate (as determined in accordance with the Credit Agreement) plus a percentage ranging from 1.00% to 1.25% for Base Rate Loans (as defined in the Credit Agreement), in either case depending on ARRIS’s consolidated net leverage ratio. The Fourth Amendment also increased to $500 million the amount of cash that can be used to offset indebtedness in the calculation of the consolidated net leverage ratio for purposes of determining the applicable interest rate. All other material terms of the Credit Agreement remained unchanged.

On October 17, 2017, the Company entered into the Third Amendment and Consent (the “Third Amendment”) to the Credit Agreement. Pursuant to the Third Amendment, ARRIS (i) incurred “Refinancing Term A Loans” of $391 million, (ii) incurred “Refinancing Term A-1 Loans” of $1,250 million, and (iii) obtained a “Refinancing Revolving Credit Facility” of $500 million, the proceeds of which were used to refinance in full the existing Term A Loans, the existing Term A-1 Loans and the existing Revolving Credit Loans outstanding under the Credit Agreement immediately prior to the effectiveness of the Third Amendment. The existing Term B Loans were not refinanced and remained outstanding.

The Third Amendment extended the maturity date of the Term A Loans and the Revolving Credit Facility to October 17, 2022. Pursuant to the Third Amendment, the Company is subject to a minimum consolidated interest coverage ratio test, which is unchanged from the Credit Agreement. In addition, the Company is subject to a maximum consolidated net leverage ratio test of not more than 4.0:1.0, subject to a step-down to 3.75:1.00 commencing with the fiscal quarter ending March 31, 2019. The amount of unrestricted cash used to offset indebtedness in the calculation of the consolidated net leverage ratio was also increased from $200 million to $500 million. The interest rates under the Third Amendment were not changed.

On April 26, 2017, ARRIS entered into a Second Amendment (the “Second Amendment”) to the Credit Agreement. The Second Amendment provided for a new Term B Loan facility in the principal amount of $545 million, the proceeds of which (along with cash on hand) were used to repay the existing Term B Loan facility. Under the terms of the Second Amendment, the new Term B-2 Loan has a maturity date of April 2024 and an interest rate of LIBOR plus a percentage ranging from 2.25% to 2.50% for Eurocurrency Rate Loans (as defined in the Credit Agreement), or the prime rate plus a percentage ranging from 1.25% to 1.50% for Base Rate Loans (as defined in the Credit Agreement), in either case depending on the Company’s consolidated net leverage ratio.

Interest rates on borrowings under the senior secured credit facilities are set forth in the table below.

	Rate	As of September 30, 2018
Term A Loan	LIBOR + 1.75  %	3.99%
Term A-1 Loan	LIBOR + 1.75  %	3.99%
Term B-3 Loan	LIBOR + 2.25 %	4.49%
Revolving Credit Facility (1)	LIBOR + 1.75  %	Not Applicable

(1) Includes unused commitment fee of 0.30% and letter of credit fee of 1.75% not reflected in interest rate above.

The Credit Agreement provides for adjustments to the interest rates paid on the Term A Loan, Term A-1 Loan, Term B-3 Loan and Revolving Credit Facility based upon the achievement of certain leverage ratios.

Borrowings under the senior secured credit facilities are secured by first-priority liens on substantially all the assets of ARRIS and certain of its present and future subsidiaries who are or become parties to, or guarantors under, the Credit Agreement governing the senior secured credit facilities. The Credit Agreement provides terms for mandatory prepayments and optional prepayments and commitment reductions. The Credit Agreement also includes events of default, which are customary for facilities of this type (with customary grace periods, as applicable), including provisions under which, upon the occurrence of an event of default, all amounts outstanding under the credit facilities may be accelerated. The Credit Agreement contains usual and customary limitations on indebtedness, liens, restricted payments, acquisitions and asset sales in the form of affirmative, negative and financial covenants, which are customary for financings of this type, including the maintenance of a minimum interest coverage ratio and a maximum leverage ratio. As of September 30, 2018, ARRIS complied with all covenants under the Credit Agreement.

During the three and nine months ended September 30, 2018, the Company made mandatory payments of approximately $21.9 million and $65.6 million, respectively, related to the senior secured credit facilities.

Other

As of September 30, 2018, the scheduled maturities of the contractual debt obligations for the next five years are as follows (in thousands):

2018 (for the remaining three months)	$	21,875
2019		87,500
2020		87,500
2021		87,500
2022		1,297,738
Thereafter		513,662