LONG-TERM DEBT

9 Months Ended

Sep. 30, 2021

In anticipation of our separation from International Paper, on August 16, 2021, we entered into a series of financing transactions in which we incurred long-term debt consisting of two term loans (“Term Loan F” and “Term Loan B”) and the 2029 Senior Notes. The proceeds of the debt were directly attributed to the Company and as such are reflected as long-term debt in the accompanying condensed combined balance sheet.

In addition to the debt noted above, the Company has the ability to access a five-year cash flow-based revolving credit facility with a total borrowing capacity of $450 million (“Revolving Credit Facility”). As described in Note 1, the Company borrowed $100 million on September 29, 2021 from its Revolving Credit Facility. Subsequent to September 30, 2021, the Company repaid $30 million of the $100 million outstanding balance on the Revolving Credit Facility.

Long-term debt is summarized in the following table:


In millions	September 30, 2021		December 31, 2020
Term Loan F - due 2027 (a)	$	516	$	—
Term Loan B - due 2028 (b)	441		—
7.00% Senior Notes - due 2029 (c)	442		—
Other	18		22
Less: current portion	(24)		—
Total	$	1,393	$	22

(a) As of September 30, 2021, presented net of $4 million in unamortized debt issuance costs.

(b) As of September 30, 2021, presented net of $5 million in unamortized debt issuance costs and $5 million in unamortized original issue discount paid.

The 2029 Senior Notes are unsecured bonds with a 7.00% fixed interest rate, payable semi-annually. The obligations under the Term Loan F, Term Loan B and Revolving Credit Facility are secured by substantially all the tangible and intangible assets of Sylvamo and its subsidiaries, subject to certain exceptions, and along with the 2029 Senior Notes facility are guaranteed by Sylvamo and certain subsidiaries. The interest rates applicable to the Term Loan F, Term Loan B and revolving credit facility are based on a fluctuating rate of interest measured by reference to LIBOR plus a fixed percentage of 1.90%, 4.50% and 1.75%, respectively, payable quarterly, with a LIBOR floor of 0% for the Term Loan F and Revolving Credit Facility and 0.50% floor for the Term Loan B.

We expect to receive interest patronage credits under the Term Loan F. Patronage credits are distributions of profits from banks in the Farm Credit system, which as cooperatives are required to distribute a portion of profits to their members. Patronage distributions, which are made primarily in cash but also in equity in the lenders, are received in the first quarter of the year following that in which they were earned. Expected patronage credits are accrued in accounts and notes receivable as a reduction to interest expense in the year earned. After giving effect to expected patronage distributions of 95 basis points, of which 70 basis points is expected as a cash rebate, the effective net interest rate on the Term Loan F was approximately 1.04% as of September 30, 2021.