(7) Long-Term Debt:

The activity in our long-term debt from January 1, 2017 to December 31, 2017 is summarized as follows:



				Year ended December 31, 2017
($ in millions)	January 1, 2017		Payments and Retirements		New Borrowings		December 31, 2017		Interest Rate at December 31, 2017*

Senior & Subsidiary
Unsecured Debt	$	15,900	$	(1,655)	$	-	$	14,245	9.22%
Senior Secured Debt		2,151		(155)		1,500		3,496	5.24%
Secured Subsidiary Debt		100		-		-		100	8.50%
Secured Debt		19		(3)		-		16	5.56%
Rural Utilities Service Loan Contracts		8		(1)		-		7	6.15%
Total Debt	$	18,178	$	(1,814)	$	1,500	$	17,863	8.44%

Less: Debt Issuance Costs		(209)						(183)
Less: Debt Premium (Discount)		(46)						(54)
Less: Current Portion		(363)						(656)
Total Long-Term Debt	$	17,560					$	16,970

* Interest rate includes amortization of debt issuance costs and debt premiums or discounts. The interest rates at December 31, 2017 represent a weighted average of multiple issuances.

Additional information regarding our senior unsecured debt, senior secured debt and subsidiary debt at December 31, 2017 and 2016 is as follows:



	2017			2016

	Principal		Interest	Principal		Interest
($ in millions)	Outstanding		Rate	Outstanding		Rate

Senior Unsecured Debt Due:
4/15/2017	$	-	8.250%	$	210	8.250%
10/1/2018		491	8.125%		583	8.125%
3/15/2019		404	7.125%		434	7.125%
4/15/2020		619	8.500%		1,169	8.500%
9/15/2020		303	8.875%		1,066	8.875%
7/1/2021		490	9.250%		500	9.250%
9/15/2021		775	6.250%		775	6.250%
4/15/2022		500	8.750%		500	8.750%
9/15/2022		2,188	10.500%		2,188	10.500%
1/15/2023		850	7.125%		850	7.125%
4/15/2024		750	7.625%		750	7.625%
1/15/2025		775	6.875%		775	6.875%
9/15/2025		3,600	11.000%		3,600	11.000%
11/1/2025		138	7.000%		138	7.000%
8/15/2026		2	6.800%		2	6.800%
1/15/2027		346	7.875%		346	7.875%
8/15/2031		945	9.000%		945	9.000%
10/1/2034		1	7.680%		1	7.680%
7/1/2035		125	7.450%		125	7.450%
10/1/2046		193	7.050%		193	7.050%
		13,495			15,150

Senior Secured Debt Due:
10/24/2019 (1)		245	5.445% (Variable)		280	4.145% (Variable)
3/31/2021 (2)		1,483	4.320% (Variable)		1,564	3.270% (Variable)
10/12/2021(3)		276	5.445% (Variable)		307	4.145% (Variable)
6/15/2024 (4)		1,492	5.320% (Variable)		-
		3,496			2,151

Subsidiary Debentures Due:
5/15/2027		200	6.750%		200	6.750%
2/1/2028		300	6.860%		300	6.860%
2/15/2028		200	6.730%		200	6.730%
10/15/2029		50	8.400%		50	8.400%
11/15/2031		100	8.500%		100	8.500%
		850			850

Total	$	17,841	8.1% (5)	$	18,151	8.3% (5)

(1) Represents borrowings under the 2014 CoBank Credit Agreement, as defined below.

(2) Represents borrowings under the JPM Credit Agreement Term Loan A, as defined below.

(3) Represents borrowings under the 2016 CoBank Credit Agreement, as defined below.

(4) Represents borrowings under the JPM Credit Agreement Term Loan B, as defined below.

(5) Interest rate represents a weighted average of the stated interest rates of multiple issuances.

New Notes Issuances

Upon completion of the CTF Acquisition on April 1, 2016, we assumed additional debt of $600 million, including $200 million aggregate principal amount of 6.75% Senior Notes due May 15, 2027, $300 million aggregate principal amount of 6.86% Senior Notes due February 1, 2028 and $100 million aggregate principal amount of 8.50% Senior Notes due November 15, 2031.

On September 25, 2015, Frontier completed a private offering of $6,600 million aggregate principal amount of unsecured Senior Notes, as follows: $1,000 million of 8.875% Senior Notes due 2020; $2,000 million of 10.50% Senior Notes due 2022; and $3,600 million of 11.00% Senior Notes due 2025. Each was issued at a price equal to 100% of its principal amount. Frontier used the net proceeds from the offering (after deducting underwriting fees) to finance a portion of the cash consideration paid in connection with the CTF Acquisition and to pay related fees and expenses. The net proceeds of the debt offering of $6,485 million were included in “Restricted cash” in the consolidated balance sheet as of December 31, 2015. In June 2016, we completed an exchange offer of registered senior notes for the privately placed senior notes.

Debt Reductions and Conversions

During 2017, Frontier used proceeds from Term Loan B (see definition and note discussion below) and cash on hand to retire $763 million of 8.875% Notes due 2020, $550 million of 8.500% Notes due 2020, $92 million of 8.125% Notes due 2018, $30 million of 7.125% Notes due 2019, and $10 million of 9.250% Notes due 2021. Frontier recorded a loss of $88 million driven primarily by premiums on the retirement of the notes. Additionally, Frontier used cash available on hand for the scheduled retirement of $210 million of 8.25% Senior Notes at maturity.

During 2016, we completed non-cash debt exchanges including related accrued interest, of $397 million of our 8.25% Notes due April 2017 for approximately $147 million of our 8.50% Notes due April 2020, $66 million of our 8.875% Notes due September 2020, and $188 million of our 10.50% Notes due September 2022. A pretax loss of approximately $7 million was recognized and included in our consolidated statement of operations for the year ended December 31, 2016.

During 2015, Frontier used cash available on hand for the scheduled retirement of $97 million of 7.875% Senior Notes, and $105 million 6.625% Senior Notes at maturity.

Term Loans and Credit Facilities

On February 27, 2017, Frontier entered into a first amended and restated credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto, pursuant to which Frontier combined its revolving credit agreement, dated as of June 2, 2014, and its term loan credit agreement, dated as of August 12, 2015. Under the JPM Credit Agreement, as further amended on June 15, 2017 by Increase Joinder No.1 (as so amended, the JPM Credit Agreement), Frontier has a $1,625 million senior secured term loan A facility (the Term Loan A) maturing on March 31, 2021, an $850 million undrawn secured revolving credit facility maturing on February 27, 2022 (the Revolver), and $1,500 million senior secured term loan B facility (the Term Loan B) maturing on June 15, 2024. The maturities of the Term Loan A, the Revolver, and the Term Loan B, in each case if still outstanding, will be accelerated in the following circumstances: (i) if, 91 days before the maturity date of any series of Senior Notes maturing in 2020, 2023 and 2024, more than $500 million in principal amount remains outstanding on such series; or (ii) if, 91 days before the maturity date of the first series of Senior Notes maturing in 2021 or 2022, more than $500 million in principal amount remains outstanding, in the aggregate, on the two series of Senior Notes maturing in such year. The determination of interest rates for each of the facilities under the JPM Credit Agreement is based on margins over the Base Rate (as defined in the JPM Credit Agreement) or over LIBOR, at the election of Frontier. Interest rate margins on the Term Loan A and Revolver (ranging from 0.75% to 1.75% for Base Rate borrowings and 1.75% to 2.75% for LIBOR borrowings) are subject to adjustment based on Frontier’s Total Leverage Ratio (as defined in the JPM Credit Agreement). The interest rate on the Term Loan A as of December 31, 2017 was LIBOR plus 2.75%. Interest rate margins on the Term Loan B (2.75% for Base Rate borrowings and 3.75% for LIBOR borrowings) are not subject to adjustment. The security package under the JPM Credit Agreement includes pledges of the equity interests in certain Frontier subsidiaries and guaranties by certain Frontier subsidiaries. As of December 31, 2017 no borrowing had been made under the revolving credit facility. Letters of credit, which may be issued under the revolver up to a maximum of $134 million, reduce available borrowing capacity under the revolving credit facility. Letters of credit issued under the revolver totaled $63 million and $0 as of December 31, 2017 and 2016, respectively. The revolving credit facility is available for general corporate purposes but may not be used to fund dividend payments if the undrawn amount under the revolver is less than $250 million.

Frontier has two senior secured credit agreements with CoBank, ACB, as administrative agent, lead arranger and a lender, and the other lenders party thereto: the first, drawn in 2011 (the 2011 CoBank Credit Agreement), was refinanced on October 12, 2016 with a similar facility for $315 million, maturing on October 12, 2021 (the 2016 CoBank Credit Agreement), and the second, drawn in 2014 (the 2014 CoBank Credit Agreement), matures on October 24, 2019. Repayment of the principal balance will be made in quarterly installments of $8 million which commenced December 31, 2016 for the 2016 CoBank Credit Agreement, and $9 million which commenced on March 31, 2015 for the 2014 CoBank Credit Agreement. The remaining outstanding principal balances to be repaid on the maturity date.

On March 29, 2017, Frontier amended the 2014 and 2016 CoBank Credit Agreements. The amendments provide that interest rate margins under each of these facilities will range from 0.875% to 3.875% for Base Rate borrowings and 1.875% to 4.875% for LIBOR borrowings, subject to adjustment based on our Total Leverage Ratio, as defined in each credit agreement. The interest rate on each of the facilities as of December 31, 2017 was LIBOR plus 3.875%. In addition, the amendments provide for increases in the maximum Leverage Ratio and expansion of the security package identical to those contained in the JPM Credit Agreement.

On January 25, 2018 Frontier further amended its credit agreements with JP Morgan Chase and CoBank (JPM Credit Amendment). The amendments expanded the security package to include interests of certain subsidiaries previously not pledged and replaced the net leverage ratio maintenance test with a first lien net leverage ratio maintenance test.

During 2015, we entered into secured financings totaling $3 million with four year terms and no stated interest rate for certain equipment purchases.

As of December 31, 2017, we were in compliance with all of our debt and credit facility covenants.

Our scheduled principal payments are as follows as of December 31, 2017:



	Principal
($ in millions)	Payments

2018	$	656
2019	$	804
2020	$	1,132
2021	$	2,558
2022	$	2,703
Thereafter	$	10,010

Other Obligations

During 2016, Frontier contributed a real estate property with a fair value of $15 million for the purpose of funding a portion of its contribution obligations to its qualified defined benefit pension plan. The pension plan obtained independent appraisals of the property and, based on these appraisals, the pension plan recorded the contribution at its fair value of $15 million. Frontier has entered into a lease for the contributed property with initial terms of 15 years at a combined aggregate annual rent of approximately $2 million. The property is managed on behalf of the pension plan by an independent fiduciary, and the terms of the lease were negotiated with the fiduciary on an arm’s-length basis.

The contribution and leaseback of the property was treated as a financing transaction and, accordingly, Frontier continues to depreciate the carrying value of the property in its financial statements and no gain or loss was recognized. An obligation of $15 million was recorded in our consolidated balance sheet within “Other liabilities” and the liability is reduced annually by a portion of the lease payments made to the pension plan.

During 2017 and 2016, Frontier modified certain operating leases for vehicles which resulted in the classification as capital leases. These agreements have lease terms of 1 to 7 years. These capital lease obligations are included in our consolidated balance sheet within “Other liabilities” and “Other current liabilities.”

In 2012, Frontier entered into a sale and leaseback arrangement for a facility in Everett, Washington and entered into a capital lease for the use of fiber in the state of Minnesota. These agreements have lease terms of 12 and 23 years, respectively. These capital lease obligations are included in our consolidated balance sheet within “Other liabilities” and “Other current liabilities.”

Future minimum payments for finance lease obligations and capital lease obligations as of December 31, 2017 are as follows:



($ in millions)	Finance Lease Obligations		Capital Lease Obligations

Year ending December 31:
2018	$	9	$	41
2019		9		29
2020		10		19
2021		10		12
2022		10		9
Thereafter		52		9
Total future payments		100		119
Less: Amounts representing interest		(55)		(14)
Present value of minimum lease payments	$	45	$	105