Commitments and Contingencies

Lease commitments

Capital leases

The capital lease obligations consist of $80.0 million at December 31, 2017 and 2016 owed to the city of Wickliffe, Kentucky, associated with Performance Materials' Wickliffe, Kentucky site, which is due at maturity in 2027. The interest rate on the $80.0 million capital lease obligation is 7.67%. Interest payments are payable semi-annually.

We have a capital lease obligation due in 2031, for certain assets located at our Purifications Cellutions manufacturing facility in Waynesboro, Georgia. The lease is with the Development Authority of Burke County (“Authority”). The Authority established the sale-leaseback of these assets by issuing an industrial development revenue bond. The bond was purchased by Ingevity and the obligations under the capital lease remain with Ingevity. Accordingly, we offset the capital lease obligation and bond on our consolidated balance sheets. Our DeRidder, Louisiana facility also had certain assets subject to a capital lease under a similar arrangement as our Purifications Cellutions manufacturing facility. During the fourth quarter of 2017 the capital lease associated with the assets at our DeRidder, Louisiana facility subject to the lease was terminated. Thus, as of December 31, 2017, the assets are legally owned by Ingevity and no longer subject to a lease. The leased assets are presented within "Property, plant and equipment, net" on the consolidated balance sheets, see Note 7 for more information.

Operating Leases

We lease a variety of assets for use in our operations that are classified as operating leases. Our operating leases principally relate to leases for administrative offices, manufacturing equipment and buildings, warehousing and storage facilities, vehicles and rail cars. Certain leases provide for escalation of the lease payments as maintenance costs and taxes increase. Rental expense is recognized on a straight-line basis over the minimum lease term. Rental expense pursuant to operating leases was $16.8 million, $17.4 million and $16.5 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Minimum rental payments pursuant to agreements as of December 31, 2017, under operating leases that have non-cancelable lease terms in excess of 12 months and under capital leases are as follows:



In millions	Operating leases		Capital leases
2018	$	19.1	$	6.1
2019	13.5		6.1
2020	9.4		6.1
2021	5.8		6.1
2022	2.7		6.1
Later years	6.4		107.8
Minimum lease payments	$	56.9	$	138.3
Less: amount representing interest			(58.3		)
Capital lease obligations			$	80.0

Legal Proceedings

We are, from time to time, involved in routine litigation incidental to our operations. None of the litigation in which we are currently involved, individually or in the aggregate, is material to our consolidated financial condition, liquidity or results of operations nor are we aware of any material pending or contemplated proceedings.