NOTE 5. Debt

Overview

In anticipation of the Spin‑Off, the Company entered into certain debt arrangements which, upon completion and closing of the Spin‑Off and related transactions on October 31, 2016, were binding upon QCP. The proceeds from the Company’s borrowings, less applicable financing costs, fees and expenses, were transferred to HCP as partial consideration for the QCP Business.

Debt as of June 30, 2017 and December 31, 2016 consisted of the following (in thousands):


			Balance Outstanding as of
	Interest	Maturity	June 30,		December 31,
Debt	Rate	Date	2017		2016
Senior secured revolving credit facility(1)	Floating	October 31, 2021	$	75,000	$	25,000
Senior secured term loan(2)	Floating	October 31, 2022		955,677		957,465
Senior secured notes	8.125%	November 1, 2023		731,989		730,604
Unsecured revolving credit facility(3)	Floating	October 31, 2018		—		—
Total			$	1,762,666	$	1,713,069

(1)

The interest rate was 6.29% and 5.86% as of June 30, 2017 and December 31, 2016, respectively. On April 26, 2017, the Company borrowed an additional $50.0 million under the senior secured revolving credit facility, the proceeds of which were available for working capital and other corporate purposes, resulting in remaining availability under the facility of $25.0 million.

(2)

The interest rate was 6.29% and 6.25% as of June 30, 2017 and December 31, 2016, respectively.

(3)

We are the borrower under a $100 million unsecured revolving credit facility, on which we may only draw prior to October 31, 2017. However, under the terms of the facility, the availability has been reduced to zero as of June 30, 2017. HCP is the sole lender.

Covenants

Our secured and unsecured debt agreements contain certain customary affirmative covenants, including maintaining a minimum debt service coverage ratio, negative covenants, including limitations on the incurrence of additional debt, issuance of preferred shares, payment of dividends, sale of properties and modification of the Master Lease, and events of default. As of June 30, 2017, management believes the Company is in compliance with all debt covenants, current on all loan payments and not otherwise in default under its debt agreements.

Fair Value of Debt

The carrying values of our variable-rate debt approximate their fair value. We estimate the fair values of fixed-rate debt using trading quotes in an inactive market, which falls within Level 2 of the fair value hierarchy. The fair value of the Notes with $750 million face value was estimated to be $772.5 million and $753.8 million as of June 30, 2017 and December 31, 2016, respectively.