Long-term Debt

As of

September 30, 2018

and

December 31, 2017,

long-term debt primarily consisted of obligations under our

2017

Senior Credit Facility (as defined below), our

5.125%

Senior Notes due

2024

(the

“2024

Notes”) and our

5.875%

Senior Notes due

2026

(the

“2026

Notes”), as follows (in thousands):

	September 30,			December 31,
	2018			2017
Long-term debt including current portion:
2017 Senior Credit Facility		595,026			635,234
2024 Notes		525,000			525,000
2026 Notes		700,000			700,000
Total outstanding principal		1,820,026			1,860,234
Unamortized deferred loan costs - 2017 Senior Credit Facility		(9,890	)		(11,777	)
Unamortized deferred loan costs - 2024 Notes		(5,994	)		(6,743	)
Unamortized deferred loan costs - 2026 Notes		(8,637	)		(9,473	)
Unamortized premium - 2026 Notes		4,729			5,187
Less current portion		-			(6,417	)
Net carrying value	$	1,800,234		$	1,831,011

Borrowing availability under the Revolving Credit Facility	$	100,000		$	100,000

February 7, 2017,

we entered into a Third Amended and Restated Credit Agreement (the

“2017

Senior Credit Facility”). As of

September 30, 2018,

the

2017

Senior Credit Facility provided total commitments of

$695.0

million, consisting of a

$595.0

million term loan facility (the

“2017

Term Loan”) and a

$100.0

million revolving credit facility (the

“2017

Revolving Credit Facility”).

For all of our interest bearing obligations, we made interest payments of approximately

$74.4

million and

$77.5

million during the

nine

-months ended

September 30, 2018

and

2017,

respectively. We did

not

capitalize any interest payments during the

nine

-months ended

September 30, 2018

2017.

Borrowings under the

2017

Term Loan bear interest, at our option, at either the London Interbank Offered Rate (“LIBOR”) or the Base Rate (as defined below), in each case, plus an applicable margin. Currently, the applicable margin is

2.25%

for LIBOR borrowings and

1.25%

for Base Rate borrowings. The applicable margin is determined quarterly based on our leverage ratio as set forth in the

2017

Senior Credit Facility (the “Leverage Ratio”). If our Leverage Ratio is less than or equal to

5.25

1.00,

the applicable margin is

2.25%

for all LIBOR borrowings and

1.25%

for all Base Rate borrowings, and if the Leverage Ratio is greater than

5.25

1.00,

the applicable margin is

2.5%

for all LIBOR borrowings and

1.5%

for all Base Rate borrowings. As of

September 30, 2018,

the interest rate on the balance outstanding under the

2017

Term Loan was

4.4%.

Borrowings under the

2017

Revolving Credit Facility currently bear interest, at our option, at either LIBOR plus

1.50%

or Base Rate plus

0.50%,

in each case based on a

first

lien leverage ratio test as set forth in the

2017

Senior Credit Facility (the “First Lien Leverage Ratio”). Base Rate is defined as the greatest of (i) the administrative agent’s prime rate, (ii) the overnight federal funds rate plus

0.50%

and (iii) LIBOR plus

1.00%.

We are required to pay a commitment fee on the average daily unused portion of the

2017

Revolving Credit Facility, which rate

may

range from

0.375%

0.50%

on an annual basis, based on the First Lien Leverage Ratio. The

2017

Revolving Credit Facility matures on

February 7, 2022,

and the

2017

Term Loan matures on

February 7, 2024.

Our obligations under the

2017

Senior Credit Facility are secured by substantially all of our consolidated assets, excluding real estate. In addition, substantially all of our subsidiaries are joint and several guarantors of, and our ownership interests in those subsidiaries are pledged to collateralize, our obligations under the

2017

Senior Credit Facility. Gray Television, Inc. is a holding company, and has

material independent assets or operations. For all applicable periods, the

2024

Notes and

2026

Notes have been fully and unconditionally guaranteed, on a joint and several, senior unsecured basis, by substantially all of Gray Television, Inc.'s subsidiaries. Any subsidiaries of Gray Television, Inc. that do

not

guarantee the

2024

Notes and

2026

Notes are minor. As of

September 30, 2018,

there were

significant restrictions on the ability of Gray Television, Inc.'s subsidiaries to distribute cash to Gray or to the guarantor subsidiaries.

The

2017

Senior Credit Facility contains affirmative and restrictive covenants with which we must comply, including: (a) limitations on additional indebtedness, (b) limitations on liens, (c) limitations on the sale of assets, (d) limitations on guarantees, (e) limitations on investments and acquisitions, (f) limitations on the payment of dividends and share repurchases, (g) limitations on mergers and (h) maintenance of the First Lien Leverage Ratio while any amount is outstanding under the

2017

Revolving Credit Facility, as well as other customary covenants for credit facilities of this type. The

2026

Notes and

2024

Notes include covenants with which we must comply which are typical for borrowing transactions of their nature. As of

September 30, 2018

and

December 31, 2017,

we were in compliance with all required covenants under all our debt obligations.

July 27, 2018,

we prepaid

$37.0

million of our

2017

Term Loan in order to comply with the

2017

Senior Credit Facility’s requirements related to our sale of broadcast spectrum in the FCC’s

2017

spectrum auction. This prepayment satisfied all future quarterly principal payment obligations under the

2017

Term loan.

Transactions Related to the Raycom Merger

In connection with the Raycom Merger, we expect to (

) replace our existing

$100

million revolving credit facility under our senior credit facility with a new

five

year revolving credit facility, the terms of which will provide for up to

$200

million in available borrowings and a maturity date extended until the

fifth

anniversary of the closing of the Raycom Merger, and (

) incur a

$1.4

billion incremental term loan (the

“2018

Term Loan) under an amended and restated senior credit facility, which is expected to have a maturity date on the

seventh

anniversary of the closing of the Raycom Merger, all subject to market conditions at the time of financing and pursuant to our financing commitment letter. In addition, Gray Escrow, Inc. (“Escrow Issuer”), a special purpose wholly-owned subsidiary, expects to issue

$750.0

million in aggregate principal amount of senior unsecured notes due

2027

(the

“2027

Notes”), which Gray intends to assume upon consummation of the Raycom Merger. The proceeds of the

2018

Term Loan and the

2027

Notes would be used to fund a portion of the cash consideration payable in the Raycom Merger. Please refer to Note

11,

Subsequent Events

for a description of the these debt financing transactions.