Note 3 - Long-term Debt

3 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Debt Disclosure [Text Block]

3. Long-term Debt

As of March 31, 2024 and December 31, 2023, long-term debt consisted of obligations under our 2019 Senior Credit Agreement (as defined below), our 5.875% senior notes due 2026 (the “2026 Notes”), our 7.0% senior notes due 2027 (the “2027 Notes”), our 4.75% senior notes due 2030 (the “2030 Notes”) and our 5.375% notes due 2031 (the “2031 Notes”), as follows (in millions):

	March 31,			December 31,
	2024			2023
Long-term debt:
2019 Senior Credit Agreement:
2019 Term Loan (matures January 2, 2026)		1,190			1,190
2021 Term Loan (matures December 1, 2028)		1,466			1,470
2026 Notes (matures July 15, 2026)		700			700
2027 Notes (matures May 15, 2027)		750			750
2030 Notes (matures October 15, 2030)		800			800
2031 Notes (matures November 15, 2031)		1,300			1,300
Total outstanding principal, including current portion		6,206			6,210
Unamortized deferred loan costs - 2019 Term Loan		(13	)		(12	)
Unamortized deferred loan costs - 2021 Term Loan		(4	)		(4	)
Unamortized deferred loan costs - 2024 Revolving Credit Facility		(6	)		(2	)
Unamortized deferred loan costs - 2026 Notes		(2	)		(3	)
Unamortized deferred loan costs - 2027 Notes		(5	)		(6	)
Unamortized deferred loan costs - 2030 Notes		(9	)		(10	)
Unamortized deferred loan costs - 2031 Notes		(14	)		(14	)
Unamortized premium - 2026 Notes		1			1
Less current portion		(15	)		(15	)
Long-term debt, less deferred financing costs	$	6,139		$	6,145
Borrowing availability under Revolving Credit Facility	$	619		$	494

Revolving Credit Facility. On February 16, 2024, we entered into a second amendment (the “Second Amendment”) of our Senior Credit Agreement. The Second Amendment, among other things, (i) increased the aggregate commitments under the existing $500 million Revolving Credit Facility by $125 million, resulting in aggregate commitments under the Revolving Credit Facility of $625 million and (ii) extended the maturity date of a $552.5 million tranche of the Revolving Credit Facility to December 31, 2027 (subject to a springing maturity in certain circumstances set forth in the Second Amendment), with a remaining non-extending tranche of the Revolving Credit Facility of $72.5 million maturing on December 1, 2026 (subject to a springing maturity in certain circumstances set forth in the Second Amendment). Borrowings under the Revolving Credit Facility bear interest, at our option, at either the SOFR rate or the Base Rate, in each case, plus an applicable margin. Because of their relationship to the interest rate caps, described below, borrowings under the 2021 Term Loan and 2019 Term Loan bear interest at the 1-month SOFR rate, plus applicable margin. As of March 31, 2024, the interest rate on the balance outstanding under the 2021 Term Loan and the 2019 Term Loan were 8.4% and 7.9%, respectively.

Interest Rate Caps. On February 23, 2023, we entered into two interest rate caps pursuant to an International Swaps and Derivatives Association ("ISDA") Master Agreement with two counterparties, Wells Fargo Bank, NA and Truist Bank, respectively. At March 31, 2024, the caps have a combined notional value of approximately $2.6 billion and mature on December 31, 2025. The interest rate caps protect the us against adverse fluctuations in interest rates by reducing its exposure to variability in cash flows on a portion of our variable-rate debt. We designated the interest rate caps as cash flow hedges of our risk of changes in cash flows attributable to changes in 1-month SOFR on our outstanding variable-rate debt in accordance with ASC 815.

The interest rate caps, as amended, effectively limit the annual interest charged on our 2019 Term Loan and 2021 Term Loan to a maximum of 1-month Term SOFR of 4.97% and 5.015%. We are required to pay aggregate fees in connection with the interest rate caps of approximately $34 million that is due and payable at maturity on December 31, 2025. On the initial designation date, we recognized an asset and corresponding liability for the deferred premium payable equal to $34 million. The asset is amortized into interest expense straight-line over the term of the hedging relationship. At March 31, 2024, the recorded value of the asset was $21 million, net of accumulated amortization. At March 31, 2024 and December 31, 2023, the fair value of the derivative liability was $23 million. We present the deferred premium, the asset, and the fair value of the derivative, net within other non-current liabilities in our condensed consolidated balance sheets.

The ISDA Master Agreement, together with its related schedules, contain customary representations, warranties and covenants. The interest rate caps were not entered into for speculative trading purposes. Changes in the fair value of the interest rate caps are reported as a component of other comprehensive income. Actual gains and losses are reclassified into earnings in the same period or periods during which the hedged transaction affects earnings and are presented in the same income statement line item as the earnings effect of the hedged transaction. Gains and losses on the derivative instrument representing hedge components excluded from the assessment of effectiveness are recognized currently in earnings and are presented in the same line of the income statement for the hedged item. We recognized $3 million and $1 million of amortization expense for the asset during the three-months ended March 31, 2024 and 2023, respectively, which is included as a component of cash flows from operating activities in our condensed consolidated statement of cash flows. Cash flows received from the counterparties pursuant to the interest rate caps are included as components of cash flows from financing activities in our condensed consolidated statements of cash flows. During the three-months ended March 31, 2024, we received $2 million of cash payments from the counterparties that we reclassified as reductions of interest expense from the interest rate caps in our condensed consolidated statement of operations. During the three-months ended March 31, 2023, SOFR was less than 4.97% and 5.015%, therefore, we did not receive any cash payments from the counterparties and, thus, we did not reclassify any amounts into interest expense from the interest rate caps in our condensed consolidated statement of operations.

For all of our interest bearing obligations, we made interest payments of approximately $75 million and $78 million during the three-months ended March 31, 2024 and 2023, respectively. During the three-months ended March 31, 2024 and 2023, respectively, we capitalized less than $1 million and $6 million and of interest payments related to the Assembly Atlanta project.

As of March 31, 2024, the aggregate minimum principal maturities of our long-term debt for the remainder of 2024 and the succeeding five years were as follows (in millions):

	Minimum Principal Maturities
Year	2019 Senior Credit Agreement		2026 Notes		2027 Notes		2030 Notes		2031 Notes		Total
Remainder of 2024	$	11	$	-	$	-	$	-	$	-	$	11
2025		15		-		-		-		-		15
2026		1,205		700		-		-		-		1,905
2027		15		-		750		-		-		765
2028		1,410		-		-		-		-		1,410
2029		-		-		-		-		-		-
Thereafter		-		-		-		800		1,300		2,100
Total	$	2,656	$	700	$	750	$	800	$	1,300	$	6,206

As of March 31, 2024, there were no significant restrictions on the ability of our subsidiaries to distribute cash to us or to the guarantor subsidiaries. The 2019 Senior Credit Agreement contains affirmative and restrictive covenants with which we must comply. The 2026 Notes, the 2027 Notes, the 2030 Notes and the 2031 Notes also include covenants with which we must comply. As of March 31, 2024 and December 31, 2023, we were in compliance with all required covenants under all our debt obligations.