Debt & Non-recourse Debt

3 Months Ended

Mar. 31, 2021

Debt Disclosure [Abstract]

Debt & Non-recourse Debt

Note 11: Debt & Non-recourse Debt

Debt

The following table details our outstanding debt balance and its associated interest rates:

	March 31,			December 31,
($ in millions)	2021			2020
Debt(1)
Senior secured credit facilities:
Term loan with a rate of 3.75%, due 2023	$	175		$	177
Revolver with a weighted average rate of 3.75%, due 2023		660			660
Senior notes with a rate of 6.125%, due 2024		300			300
Other debt		27			27
		1,162			1,164
Less: unamortized deferred financing costs and discount(2)(3)		(6	)		(5	)
	$	1,156		$	1,159

⁽¹⁾ As of March 31, 2021 and December 31, 2020, weighted-average interest rates were 4.441 percent and 3.357 percent, respectively.

⁽²⁾ Amount includes deferred financing costs related to our term loan and senior notes of $2 million and $4 million, respectively, as of March 31, 2021 and $1 million and $4 million, respectively, as of December 31, 2020.

⁽³⁾ Amount does not include deferred financing costs of $4 million as of March 31, 2021 and December 31, 2020, relating to our revolving facility included in Other Assets in our condensed consolidated balance sheets.

In March 2021, we amended our Credit Agreement which amended certain terms related to financial covenants to permit the previously announced proposed acquisition of Dakota Holdings, Inc., (“Diamond”), which indirectly owns all of the interests in Diamond Resorts International Inc. (the “Merger”), pursuant to that certain Agreement and Plan of Merger dated March 10, 2021. Refer to Note 20: Planned Acquisition for further information regarding the Merger. The borrowing capacity under the Credit Agreement remained the same. In connection with the amendment, we incurred $1 million in debt issuance costs. In addition, we obtained a revolving credit facility commitment in connection with the Merger and incurred $2 million in debt issuance costs which were amortized over the term of the commitment in the first quarter of 2021. This was included in interest expense in our condensed consolidated statements of operations.

During the three months ended March 31, 2021, we repaid $2 million (including recurring payments) under the senior secured credit facilities with an interest rate based on one month LIBOR plus 3.50 percent, subject to a 0.25 percent floor.

We primarily use interest rate swaps as part of our interest rate risk management strategy for our variable-rate debt. As of March 31, 2021, we had approximately $175 million of our Term Loan subject to interest rate swaps. Such interest rate swaps converted the LIBOR-based variable rates on our Term Loan to an average fixed annual rate of 0.53 percent per annum through November 2023.  Our interest rate swaps have been designated and qualify as cash flow hedges of interest rate risk and recorded as a liability in Accounts payable, accrued expenses and other in our condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020. We characterize payments we make in connection with these derivative instruments as interest expense and a reclassification of accumulated other comprehensive income for presentation purposes. For the three months ended March 31, 2021, we recorded less than $1 million in accumulated other comprehensive loss related to the hedge.

As of March 31, 2021 and December 31, 2020, we had $1 million of outstanding letters of credit under the revolving credit facility.  We were in compliance with all applicable maintenance and financial covenants and ratios as of March 31, 2021.

Non-recourse Debt

The following table details our outstanding non-recourse debt balance and its associated interest rates:

	March 31,			December 31,
($ in millions)	2021			2020
Non-recourse debt(1)
Securitized Debt with a weighted average rate of 2.711%, due 2028		96			106
Securitized Debt with a weighted average rate of 3.602%, due 2032		187			202
Securitized Debt with a weighted average rate of 2.431%, due 2033		196			216
Securitized Debt with a weighted average rate of 3.658%, due 2039		227			251
		706			775
Less: unamortized deferred financing costs(2)		(8	)		(9	)
	$	698		$	766

⁽¹⁾ As of March 31, 2021 and December 31, 2020, weighted-average interest rates were 3.174 percent and 3.173 percent, respectively.

⁽²⁾ Amount relates to Securitized Debt only and does not include deferred financing costs of $2 million and $3 million as of March 31, 2021 and December 31, 2020, respectively, relating to our Timeshare Facility included in Other Assets in our condensed consolidated balance sheets.

The Timeshare Facility is a non-recourse obligation with a borrowing capacity of $450 million and is payable solely from the pool of timeshare financing receivables pledged as collateral and related assets. As of March 31, 2021, and December 31, 2020, we had $450 million remaining borrowing capacity under our Timeshare Facility, respectively. In March 2021, we amended our Timeshare Facility to align with our amended Credit Agreement, as described above.

We are required to deposit payments received from customers on the timeshare financing receivables securing the Timeshare Facility and Securitized Debt into depository accounts maintained by third parties. On a monthly basis, the depository accounts are utilized to make required principal, interest and other payments due under the respective loan agreements. The balances in the depository accounts were $29 million as of March 31, 2021 and December 31, 2020, respectively, and were included in Restricted cash in our condensed consolidated balance sheets.

Debt Maturities

The contractual maturities of our debt and non-recourse debt as of March 31, 2021 were as follows:

($ in millions)	Debt		Non-recourse Debt		Total
Year
2021 (remaining)	$	10	$	104	$	114
2022		11		174		185
2023		818		138		956
2024		300		115		415
2025		—		56		56
Thereafter		23		119		142
	$	1,162	$	706	$	1,868