(6) Debt

Outstanding debt at December 31, 2016 and 2015 is summarized as follows:


	Outstanding		Carrying value
	Principal		December 31,		December 31,
	December 31, 2016		2016		2015
	amounts in millions
Expedia Holdings margin loan	$	350	$	350	—
Expedia 7.456% senior notes due 2018		500		544	—
Expedia 5.95% senior notes due 2020		750		837	—
Expedia 2.5% (€650 million) senior notes due 2022		683		727	—
Expedia 4.5% senior notes due 2024		500		523	—
Expedia 5.0% senior notes due 2026		750		787	—
Vitalize Secured Notes		13		13	18
Vitalize revolving line of credit due 2020		11		11	19
Capital lease obligations		3		3	4
Total debt	$	3,560	$	3,795	41
Less debt classified as current (1)				(7)	(5)
Total long-term debt			$	3,788	36

(1)

Included in the other current liabilities line in the consolidated balance sheets as of December 31, 2016 and 2015.

$400 Million Margin Loan due 2018

On November 1, 2016, LEXE Marginco, LLC (“SplitSPV”), a wholly-owned subsidiary of Expedia Holdings, entered into a margin loan agreement with an availability of $400 million with various lender parties. Approximately 10.8 million shares of EXPE held by the Company with a value of $1.2 billion were pledged by SplitSPV as collateral to the loan as of December 31, 2016. This margin loan has a term of two years and bears interest at a rate of LIBOR plus 1.60% and contains an undrawn commitment fee of 0.75% per annum. Interest on the term loan is payable on the last business day of each calendar quarter, beginning on December 31, 2016. As of December 31, 2016, the interest rate on this margin loan was 2.48%. The outstanding margin loan contains various affirmative and negative covenants that restrict the activities of the borrower. The loan agreement does not include any financial covenants. On November 2, 2016, Expedia Holdings drew $350 million under the margin loan, and on November 4, 2016, Expedia Holdings distributed approximately $299 million of the proceeds to Liberty Interactive as a dividend. Additionally, Expedia Holdings reimbursed Liberty Ventures approximately $549 thousand for debt issuance costs incurred in connection with this loan.

Expedia Outstanding Debt

Expedia 7.456% senior notes due 2018

Expedia has $500 million in registered senior unsecured notes outstanding at December 31, 2016 that are due in August 2018 and bear interest at 7.456% (the “Expedia 7.456% Notes”). Interest is payable semi-annually in February and August of each year. At any time Expedia may redeem the Expedia 7.456% Notes at a redemption price of 100% of the principal plus accrued interest, plus a “make-whole” premium, in whole or in part. The premium associated with the Expedia 7.456% Notes was recorded in acquisition accounting as the difference between fair value and the outstanding principal amount at the date of acquisition. This premium is being amortized over the remaining period to maturity through interest expense using the effective interest rate method.

Expedia 5.95% senior notes due 2020

Expedia has $750 million in registered senior unsecured notes outstanding at December 31, 2016 that are due in August 2020 and bear interest at 5.95% (the “Expedia 5.95% Notes”). The Expedia 5.95% Notes were issued at 99.893% of par. Interest is payable semi-annually in February and August of each year. Expedia may redeem the Expedia 5.95% Notes at a redemption price of 100% of the principal plus accrued interest, plus a “make-whole” premium, in whole or in part. The premium associated with the Expedia 5.95% Notes was recorded in acquisition accounting as the difference between fair value and the outstanding principal amount at the date of acquisition. This premium is being amortized over the remaining period to maturity through interest expense using the effective interest rate method.

Expedia 2.5% senior notes due 2022

Expedia has €650 million of registered Expedia 2.5% Notes outstanding at December 31, 2016. The Expedia 2.5% Notes were issued at 99.525% of par. Interest is payable annually in arrears in June of each year, beginning June 3, 2016. Expedia may redeem the Expedia 2.5% Notes at its option, at whole or in part, at any time or from time to time. If Expedia elects to redeem the Expedia 2.5% Notes prior to March 3, 2022, it may redeem them at a specified “make-whole” premium. If Expedia elects to redeem the Expedia 2.5% Notes on or after March 3, 2022, it may redeem them at a redemption price of 100% of the principal plus accrued and unpaid interest. Subject to certain limited exceptions, all payments of interest and principal for the Expedia 2.5% Notes will be made in Euros. The premium associated with the Expedia 2.5% Notes was recorded in acquisition accounting as the difference between fair value and the outstanding principal amount at the date of acquisition. This premium is being amortized over the remaining period to maturity through interest expense using the effective interest rate method.

Expedia 4.5% senior notes due 2024

Expedia has $500 million in registered senior unsecured notes outstanding at December 31, 2016 that are due in August 2024 and bear interest at 4.5% (the “Expedia 4.5% Notes”). The Expedia 4.5% Notes were issued at 99.444% of par. Interest is payable semi-annually in February and August of each year. Expedia may redeem the Expedia 4.5% Notes at its option at any time in whole or from time to time in part. If Expedia elects to redeem the Expedia 4.5% Notes prior to May 15, 2024, it may redeem them at a redemption price of 100% of the principal plus accrued interest, plus a “make-whole” premium. If Expedia elects to redeem the Expedia 4.5% Notes on or after May 15, 2024, it may redeem them at a redemption price of 100% of the principal plus accrued interest. The premium associated with the Expedia 4.5% Notes was recorded in acquisition accounting as the difference between fair value and the outstanding principal amount at the date of acquisition. This premium is being amortized over the remaining period to maturity through interest expense using the effective interest rate method.

Expedia 5.0% senior notes due 2026

In December 2015, Expedia privately placed $750 million of senior unsecured notes at 99.535% of par that are due in February 2026 and bear interest at 5.0%. In November 2016, Expedia completed an offer to exchange these notes for registered notes having substantially the same financial terms and covenants as the original notes (the unregistered and registered notes collectively, the "Expedia 5.0% Notes"). Interest is payable semi-annually in arrears in February and August of each year, beginning August 15, 2016. Expedia may redeem the Expedia 5.0% Notes at its option at any time in whole or from time to time in part. If Expedia elects to redeem the Expedia 5.0% Notes prior to November 12, 2025, it may redeem them at a redemption price of 100% of the principal plus accrued interest, plus a “make-whole” premium. If Expedia elects to redeem the Expedia 5.0% Notes on or after November 12, 2025, it may redeem them at a redemption price of 100% of the principal plus accrued interest. The premium associated with the Expedia 5.0% Notes was recorded in acquisition accounting as the difference between fair value and the outstanding principal amount at the date of acquisition. This premium is being amortized over the remaining period to maturity through interest expense using the effective interest rate method.

The Expedia 7.456%, 5.95%, 2.5%, 4.5% and 5.0% Notes (collectively the “Notes”) are senior unsecured obligations issued by Expedia and guaranteed by certain domestic Expedia subsidiaries. The Notes rank equally in right of payment with all of Expedia’s existing and future unsecured and unsubordinated obligations of Expedia and the guarantor subsidiaries. In addition, the Notes include covenants that limit Expedia’s ability to (i) create certain liens, (ii) enter into sale/leaseback transactions and (iii) merge or consolidate with or into another entity or transfer substantially all of its assets. The Expedia 5.95%, 2.5%, 4.5% and 5.0% Notes are redeemable in whole or in part, at the option of the holders thereof, upon the occurrence of certain change of control triggering events at a purchase price in cash equal to 101% of the principal plus accrued and unpaid interest.

Expedia Credit Facility

As of December 31, 2016, Expedia maintained a $1.5 billion unsecured revolving credit facility with a group of lenders, which is unconditionally guaranteed by certain domestic Expedia subsidiaries that are the same as under the Notes and expires in February 2021. As of December 31, 2016, Expedia did not have any revolving credit facility borrowings outstanding. The facility bears interest based on Expedia’s credit ratings, with drawn amounts bearing interest at LIBOR plus 137.5 basis points and the commitment fee on undrawn amounts at 17.5 basis points as of December 31, 2016. The facility contains covenants including maximum leverage and minimum interest coverage ratios. The amount of stand-by letters of credit (“LOCs”) issued under the facility reduces the credit amount available. As of December 31, 2016, there were $19 million of outstanding stand-by LOCs issued under the facility.

In addition, one of Expedia’s international subsidiaries maintains a Euro 50 million uncommitted credit facility, which is guaranteed by Expedia and may be terminated at any time by the lender. As of December 31, 2016, there were no borrowings outstanding under this facility.

Vitalize Secured Notes

As of December 31, 2016, Vitalize has various outstanding secured notes. Principal and interest payments on the secured notes are payable monthly based on the date of issuance. The secured notes are comprised of both fixed and variable rate notes with an interest rate of 4.14% on the fixed rate note and an interest rate of LIBOR plus 250 basis points on the variable rate notes (3.21% on the two variable rate notes at December 31, 2016). The maturity dates on the secured notes range from 2019 to 2022.

In March 2012, Vitalize purchased land and a building for its new corporate headquarters for a total price of $7.6 million, a portion of which was paid for with debt proceeds. In March 2013, Vitalize entered into a loan for $2.9 million as a construction loan to finance modifications on the new office building. In March 2014, Vitalize entered into a loan with US Bank for $3.1 million for construction renovations on its new corporate headquarters. The land and building serve as collateral under the terms of the master term loan agreement for both the March 2013 and 2014 notes. In January 2015, Vitalize entered into an agreement with J.P. Morgan Chase Bank for a $12.5 million secured note. As of December 31, 2016, the total outstanding balance of the construction loans and secured note is approximately $13 million.

Vitalize Revolving Line of Credit

On February 10, 2015, Vitalize entered into a revolving line of credit agreement (the "Revolver") that is secured by Vitalize's inventory and accounts receivable. The maximum amount allowed under the Revolver is $50 million, and the outstanding balance accrues interest at LIBOR plus 150 basis points, with a rate option balance that accrues interest at the CB Floating Rate less 125 basis points. The Revolver matures on January 20, 2020. Vitalize periodically borrows and repays amounts outstanding under the Revolver depending on its cash needs. As of December 31, 2016, the outstanding balance on the Revolver was approximately $11 million with a weighted average interest rate of 2.00%.

Five Year Maturities

The annual principal maturities of the Company's debt, excluding capital leases, based on stated maturity dates, for each of the next five years is as follows (amounts in millions):


2017	$	7
2018	$	851
2019	$	7
2020	$	762
2021	$	—

Fair Value of Debt

The fair value, based on quoted market prices in less active markets (Level 2), of Expedia’s publicly traded debt securities is as follows (amounts in millions):


	December 31,
	2016
Expedia 7.456% senior notes due 2018	$	541
Expedia 5.95% senior notes due 2020	$	823
Expedia 2.5% (€650 million) senior notes due 2022 (1)	$	718
Expedia 4.5% senior notes due 2024	$	511
Expedia 5.0% senior notes due 2026	$	782

(1)

Approximately 682 million Euro as of December 31, 2016.

The Company estimates the fair value of its secured notes and Revolver based on the current rate offered to the Company for debt of the same remaining maturities (level 3). The Company believes that the carrying amount of its Revolver and secured notes approximated fair value at December 31, 2016 and December 31, 2015.

Covenant Compliance

As of December 31, 2016, Vitalize was not in compliance with one of its financial covenants related to its fixed charge coverage ratio on approximately $9 million of the Vitalize Secured Notes outstanding. The covenant violation was a direct result of a one-time charge for transaction-related tax obligations recorded in the fourth quarter. Subsequent to December 31, 2016, Vitalize obtained a waiver of the default from the lending institution. Other than this instance, the Company was in compliance with its debt covenants which consist of both financial and non-financial covenants as of December 31, 2016.