Debt

3 Months Ended

Mar. 31, 2020

Debt as of March 31, 2020 and December 31, 2019 was comprised of the following:



(in thousands)					Balance as of
Debt Description	Issued	Maturity	Interest Rate	Interest Payable	March 31, 2020			December 31, 2019
First Lien Term Loan due 2026	9/23/2019	9/23/2026	Adj. LIBOR +3.25%	Quarterly	3,094,450			3,102,225
First Lien Revolving Credit Facility	3/16/2018	3/16/2023	Adj. LIBOR +2.75%	Quarterly	220,000			—
Second Lien Notes due 2028	1/28/2020	1/15/2028	6.250%	1/15 and 7/15	1,300,000			—
Prime Notes	5/2/2016	5/15/2023	9.250%	5/15 and 11/15	—			1,246,000
First Lien Notes due 2024	4/4/2019	4/15/2024	5.250%	2/15 and 8/15	750,000			750,000
First Lien Notes due 2026	4/4/2019	4/15/2026	5.750%	3/15 and 9/15	1,350,000			1,350,000
ADT Notes due 2021	10/1/2013	10/15/2021	6.250%	4/15 and 10/15	1,000,000			1,000,000
ADT Notes due 2022	7/5/2012	7/15/2022	3.500%	1/15 and 7/15	1,000,000			1,000,000
ADT Notes due 2023	1/14/2013	6/15/2023	4.125%	6/15 and 12/15	700,000			700,000
ADT Notes due 2032	5/2/2016	7/15/2032	4.875%	1/15 and 7/15	728,016			728,016
ADT Notes due 2042	7/5/2012	7/15/2042	4.875%	1/15 and 7/15	21,896			21,896
Finance lease obligations	N/A	N/A	N/A	N/A	72,496			74,784
Less: Unamortized debt discount, net					(25,950		)	(26,840		)
Less: Unamortized deferred financing costs					(61,017		)	(58,075		)
Less: Unamortized purchase accounting fair value adjustment and other					(192,028		)	(195,731		)
Total debt					9,957,863			9,692,275
Less: Current maturities of long-term debt					(58,805		)	(58,049		)
Long-term debt					$	9,899,058		$	9,634,226

__________________

N/A—Not applicable

Significant changes in the Company’s debt during the three months ended March 31, 2020 were as follows:

First Lien Credit Agreement

As of March 31, 2020, the Company had an outstanding balance of $220 million and an available borrowing capacity of $180 million under a first lien revolving credit facility (the “First Lien Revolving Credit Facility”).

Second Lien Notes due 2028

During January 2020, the Company issued $1.3 billion aggregate principal amount of 6.250% second-priority senior secured notes due 2028 (the “Second Lien Notes due 2028”). The proceeds from the Second Lien Notes due 2028, along with cash on hand and borrowings under the First Lien Revolving Credit Facility, were used to redeem the outstanding $1.2 billion aggregate principal amount of the Company’s 9.250% second-priority senior secured notes due 2023 (the “Prime Notes”) and pay any related fees and expenses, including the call premium on the outstanding Prime Notes. The deferred financing costs incurred in connection with the issuance of the Second Lien Notes due 2028 were not material.

The Second Lien Notes due 2028 are due at maturity, however, may be redeemed at the Company’s option as follows:

•

Prior to January 15, 2023, in whole at any time or in part from time to time, (a) at a redemption price equal to 100% of the principal amount of the Second Lien Notes due 2028 redeemed, plus a make-whole premium and accrued and unpaid interest as of, but excluding, the redemption date or (b) for up to 40% of the original aggregate principal amount of the Second Lien Notes due 2028 and in an aggregate amount equal to the net cash proceeds of any equity offerings, at a redemption price equal to 106.250%, plus accrued and unpaid interest, so long as at least 50% of the original aggregate principal amount of the Second Lien Notes due 2028 shall remain outstanding after each such redemption.


•	On or after January 15, 2023, in whole at any time or in part from time to time, at a redemption price equal to 103.125% of the principal amount of the Second Lien Notes due 2028 redeemed and accrued and unpaid interest as of, but excluding, the redemption date. The redemption price decreases to 101.563% on or after January 15, 2024 and decreases to 100% on or after January 15, 2025.

The Company’s obligations relating to the Second Lien Notes due 2028 are guaranteed, jointly and severally, on a senior secured second-priority basis, by each of the Company’s domestic subsidiaries that guarantees its First Lien Credit Agreement and by each of the Company’s future domestic subsidiaries that guarantees certain of the Company’s debt and the related guarantees are secured by second-priority security interests in substantially all of the tangible and intangible assets of the Company’s domestic subsidiaries, subject to certain permitted liens and exceptions. Additionally, upon the occurrence of specified change of control events, the Company must offer to repurchase the Second Lien Notes due 2028 at 101% of the principal amount, plus accrued and unpaid interest, if any, to, but not including, the purchase date. The indenture governing the Second Lien Notes due 2028 also provides for customary events of default.

Prime Notes

The indenture underlying the outstanding $1.2 billion aggregate principal amount of the Prime Notes was discharged during January 2020 and the Prime Notes were redeemed during February 2020 for a total redemption price of approximately $1.3 billion, which included the related call premium.

Securitization Financing Agreement

During March 2020, the Company entered into the Securitization Financing Agreement, which permits securitization financing of up to $200 million and matures on March 5, 2021, subject to extension, and bears interest at variable rates. The Securitization Financing Agreement provides the Company with an opportunity to obtain financing backed by the sale of retail installment contract receivables from transactions involving a security system that is sold outright to the customer. During April 2020, the Company amended the Securitization Financing Agreement to permit the financing backed by the sale of retail installment contract receivables from transactions in which the Company retains ownership of a security system.

The Company will sell or contribute the installment receivables to the Company’s wholly-owned consolidated bankruptcy-remote special purpose entity (the “SPE”), and the SPE will obtain financing backed by the retail installment contract receivables. The SPE is a separate legal entity with its own creditors who will be entitled, prior to and upon the liquidation of the SPE, to be satisfied out of the SPE’s assets prior to any assets in the SPE becoming available to the Company. Accordingly, the assets of the SPE are not available to pay creditors of the Company (other than the SPE), although collections from these retail installment contract receivables in excess of amounts required to repay the SPE’s creditors may be remitted to the Company during and after the term of the Securitization Financing Agreement.

As of March 31, 2020, there were no sales of any retail installment contract receivables pursuant to the Securitization Financing Agreement.

Loss on Extinguishment of Debt

During the three months ended March 31, 2020, loss on extinguishment of debt totaled $66 million and related to the call premium and write-off of unamortized deferred financing costs in connection with the $1.2 billion redemption of the Prime Notes in February 2020.

During the three months ended March 31, 2019, loss on extinguishment of debt totaled $22 million and related to the call premium and the partial write-off of unamortized deferred financing costs in connection with the $300 million partial redemption of the Prime Notes in February 2019.