Note 13. Indebtedness

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


	As of June 30, 2017			As of December 31, 2016
Current liabilities:
Term A loan	$	49,500		$	49,500
Term A-1 loan		40,000			40,000
Term B-2 loan		5,450			—
Lease finance obligation		784			775

Current obligations		95,734			90,275
Current deferred financing fees and debt discount		(6,398	)		(7,541	)

	89,336			82,734
Noncurrent liabilities:
Term A loan		841,500			866,250
Term A-1 loan		710,000			730,000
Term B loan		—			543,812
Term B-2 loan		538,188			—
Revolver		—			—
Lease finance obligation		61,488			57,902

Noncurrent obligations		2,151,176			2,197,964
Noncurrent deferred financing fees and debt discount		(16,670	)		(17,955	)

	2,134,506			2,180,009

Total	$	2,223,842		$	2,262,743

Senior Secured Credit Facilities

On June 18, 2015, ARRIS Group amended and restated its existing credit agreement dated March 27, 2013 (the “Existing Credit Agreement”) to improve the terms and conditions of the credit agreement, extend the maturities of certain loan facilities, increase the amount of the revolving credit facility, and add a new term A-1 loan facility to fund the acquisition of Pace. The credit facility under the amended credit agreement (the “Amended Credit Agreement”) is comprised of (i) a “Term Loan A Facility” of $990 million, (ii) a “Term Loan B Facility” of $543.8 million, (iii) a “Revolving Credit Facility” of $500 million and (iv) a “Term Loan A-1 Facility” of $800 million, was funded upon the closing of the acquisition of Pace in 2016. Under the Amended Credit Agreement, the Term Loan A Facility, Term Loan A-1 Facility and the Revolving Credit Facility will mature on June 18, 2020. The Term Loan B Facility was scheduled to mature on April 17, 2020, but has been amended as described below.

On April 26, 2017, ARRIS and certain of ARRIS’s subsidiaries entered into a Second Amendment (the “Second Amendment”) to its Amended and Restated Credit Facility dated June 18, 2015, as previously amended on December 15, 2015 (the “Credit Agreement”). The Second Amendment provides 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. All other material terms of the Credit Agreement remain unchanged.

In connection with the Second Amendment to the Credit Agreement, the Company capitalized approximately $0.1 million of financing fees and $1.4 million of original issuance discount. In addition, the Company expensed approximately $2.5 million of debt issuance costs and wrote off approximately $0.3 million of existing debt issuance costs associated with certain lenders who were not party to the Term Loan B-2 Facility, which were included as interest expense in the Consolidated Statements of Operations for the three and six months ended June 30, 2017.

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


	Rate			As of June 30, 2017
Term Loan A		LIBOR + 1.75	%		2.98	%
Term Loan A-1		LIBOR + 1.75	%		2.98	%
Term Loan B-2		LIBOR + 2.50	%		3.73	%
Revolving Credit Facility⁽¹⁾		LIBOR + 1.75	%		Not Applicable

(1)	Includes unused commitment fee of 0.35% and letter of credit fee of 1.75% not reflected in interest rate above.

The Amended Credit Agreement provides for adjustments to the interest rates paid on the Term Loan A, Term Loan A-1, Term Loan B-2 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 of the assets of ARRIS and certain of its present and future subsidiaries who are or become parties to, or guarantors under, the Amended Credit Agreement governing the senior secured credit facilities. The Amended Credit Agreement provides terms for mandatory prepayments, optional prepayments and commitment reductions. The Amended 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 Amended 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 of 3.50:1 and a maximum leverage ratio of 3.50:1. As of June 30, 2017, ARRIS was in compliance with all covenants under the Amended Credit Agreement.

During the three and six months ended June 30, 2017, the Company made mandatory prepayments of approximately $23.7 million and $46.1 million, respectively, related to the senior secured credit facilities.

As of June 30, 2017, the scheduled maturities of the contractual debt obligations for the next five years are as follows (in thousands):


2017 (for the remaining six months)	$	47,475
2018		94,950
2019		94,950
2020		1,422,700
2021		5,450
Thereafter		519,113

Lease Financing Obligation

In 2015, the Company sold its San Diego office complex consisting of land and buildings. The Company concurrently entered into a leaseback arrangement for two of the buildings (Building 1 and Building 2). Building 1 did not qualify for sale-leaseback accounting due to continuing involvement that will exist for the 10-year lease term. Accordingly, the carrying value of Building 1 will remain on the Company’s balance sheet and will be depreciated over the ten-year lease period with the proceeds reflected as a financing obligation.

During the quarter ended June 30, 2017, the Company recorded a $4.0 million increase to both the financing obligation and the building asset, which will be depreciated, as a result of lessor funded improvements.