Long-Term Debt

12 Months Ended

Dec. 31, 2020

Long-term debt at December 31 (in millions):



	2020						2019
	Principal		Unamortized Discount and Debt Issuance Costs		Net		Principal		Unamortized Discount and Debt Issuance Costs		Net
Revolving credit facilities, variable interest rate, due 2024	$	—	$	—	$	—	$	—	$	—	$	—
KCS 3.00% senior notes, due 2023	439.1		1.7		437.4		439.1		2.5		436.6
KCS 3.85% senior notes, due 2023	199.2		0.8		198.4		199.2		1.1		198.1
KCS 3.125% senior notes, due 2026	250.0		2.0		248.0		250.0		2.4		247.6
KCS 2.875% senior notes, due 2029	425.0		3.8		421.2		425.0		4.2		420.8
KCS 4.30% senior notes, due 2043	448.7		8.5		440.2		448.7		8.8		439.9
KCS 4.95% senior notes, due 2045	499.2		6.9		492.3		499.2		7.2		492.0
KCS 4.70% senior notes, due 2048	500.0		5.8		494.2		500.0		6.0		494.0
KCS 3.50% senior notes, due 2050	550.0		10.8		539.2		—		—		—
KCS 4.20% senior notes, due 2069	425.0		6.9		418.1		425.0		7.0		418.0
KCSR 3.85% to 4.95% senior notes, due through 2045	2.7		—		2.7		2.7		—		2.7
KCSM 3.00% senior notes, due 2023	5.6		—		5.6		5.6		—		5.6
RRIF loans 2.96% to 4.29%, due serially through 2037	66.2		0.4		65.8		70.2		0.4		69.8
Financing agreements 9.311%, due serially through 2020	—		—		—		12.0		—		12.0
Finance lease obligations, due serially to 2025	7.5		—		7.5		8.7		—		8.7
Other debt obligations	0.2		—		0.2		0.2		—		0.2
Total	3,818.4		47.6		3,770.8		3,285.6		39.6		3,246.0
Less: Debt due within one year	6.4		—		6.4		18.0		—		18.0
Long-term debt	$	3,812.0	$	47.6	$	3,764.4	$	3,267.6	$	39.6	$	3,228.0

Revolving Credit Facility

KCS, with certain of its domestic subsidiaries named therein as guarantors, has a $600.0 million senior unsecured revolving credit facility (the “Revolving Credit Facility”), with a $25.0 million standby letter of credit facility which, if utilized, constitutes usage under the Revolving Credit Facility. The Revolving Credit Facility serves as a backstop for KCS’s commercial paper program (the “Commercial Paper Program”) which generally serves as the Company’s primary means of short-term funding.

Borrowings under the Revolving Credit Facility bear interest at floating rates. Depending on the Company’s credit rating, the margin that KCS would pay above the London Interbank Offered Rate (“LIBOR”) at any point is between 1.000% and 1.750%. As of December 31, 2020, the margin was 1.25% based on KCS’s current credit rating.

The Revolving Credit Facility is guaranteed by KCSR, together with certain domestic subsidiaries named therein as guarantors and matures on March 8, 2024. The Revolving Credit Facility agreement contains representations, warranties, covenants and events of default that are customary for credit agreements of this type. The occurrence of an event of default could result in the termination of the commitments and the acceleration of the repayment of any outstanding principal balance on the Revolving Credit Facility and the Commercial Paper Program.

As of December 31, 2020 and 2019, KCS had no outstanding borrowings under the revolving credit facility.

Senior Notes

The Company’s senior notes include certain covenants that are customary for these types of debt instruments issued by borrowers with similar credit ratings.

The KCS notes are KCS’s general unsecured senior obligations and are unconditionally guaranteed, jointly and severally, on an unsecured senior basis by each current and future domestic subsidiary of KCS that from time to time guarantees the Revolving Credit Facility or any other debt of KCS or any of KCS’s significant subsidiaries that is a guarantor (collectively, the “Note Guarantors”).

KCSR’s senior notes are unconditionally guaranteed, jointly and severally, on an unsecured senior basis, by KCS and each current and future domestic subsidiary of KCS that guarantees the Revolving Credit Facility or certain other debt of KCS or a note guarantor. KCSR’s senior notes and the note guarantees rank pari passu in right of payment with KCSR’s, KCS’s and the Note Guarantors’ existing and future unsecured, unsubordinated obligations.

KCSM’s senior notes are denominated in U.S. dollars; are unsecured, unsubordinated obligations; rank pari passu in right of payment with KCSM’s existing and future unsecured, unsubordinated obligations and are senior in right of payment to KCSM’s future subordinated indebtedness.

Senior notes are redeemable at the issuer’s option, in whole or in part, at any time, by paying the greater of either 100% of the principal amount to be redeemed and a formula price based on interest rates prevailing at the time of redemption and time remaining to maturity, plus, in each case, accrued interest thereon to, but excluding the redemption date. In addition, KCSM senior notes are redeemable, in whole but not in part, at KCSM’s option at any time at a redemption price of 100% of their principal amount, plus any accrued unpaid interest in the event of certain changes in the Mexican withholding tax rate.

On April 22, 2020, KCS issued $550.0 million principal amount of senior unsecured notes due May 1, 2050 (the “3.50% Senior Notes”), which bear interest semiannually at a fixed annual rate of 3.50%. The 3.50% Senior Notes were issued at a discount to par value, resulting in a $4.4 million discount and a yield to maturity of 3.543%. The net proceeds from the offering were used for general corporate purposes, including to repurchase shares of KCS’s common stock.

RRIF Loan Agreements

The following loans were made under the Railroad Rehabilitation and Improvement Financing (“RRIF”) Program administered by the Federal Railroad Administration (“FRA”):

KCSR RRIF Loan Agreement. On February 21, 2012, KCSR entered into an agreement with the FRA to borrow $54.6 million to be used to reimburse KCSR for a portion of the purchase price of thirty new locomotives (the “Locomotives”) acquired by KCSR in the fourth quarter of 2011. The loan bears interest at 2.96% annually and the principal balance amortizes quarterly with a final maturity of February 24, 2037. The obligations under the financing agreement are secured by a first priority security interest in the Locomotives and certain related rights. In addition, the Company has agreed to guarantee repayment of the amounts due under the financing agreement and certain related agreements. The occurrence of an event of default could result in the acceleration of the repayment of any outstanding principal balance of the loan.

Tex-Mex RRIF Loan Agreement. On June 28, 2005, Tex-Mex entered into an agreement with the FRA to borrow $50.0 million to be used for infrastructure improvements in order to accommodate growing freight rail traffic related to the NAFTA corridor. The loan bears interest at 4.29% annually and the principal balance amortizes quarterly with a final maturity of July 13, 2030. The loan is guaranteed by Mexrail, which has issued a pledge agreement in favor of the lender equal to the gross revenues earned by Mexrail on per-car fees on traffic crossing the International Rail Bridge in Laredo, Texas. In addition, the Company has agreed to guarantee the scheduled principal payment installments due to the FRA from Tex-Mex under the loan agreement on a rolling five-year basis.

Locomotive Financing Agreements

During 2011, KCSM entered into financing agreements totaling $91.0 million to purchase locomotives. The agreements matured and final payment was made during December 2020. Prior to repayment, the financing agreements were payable on a quarterly basis and contained annual interest rates of 9.311%.

Debt Covenants Compliance

The Company was in compliance with all of its debt covenants as of December 31, 2020.

Other Debt Provisions

Certain loan agreements and debt instruments entered into or guaranteed by the Company and its subsidiaries provide for default in the event of a specified change in control of the Company or particular subsidiaries of the Company.

Debt Maturities

Minimum annual payments for debt maturities are as follows (in millions):


Years	Long-Term Debt		Net Present Value Finance Leases		Total
2021	$	4.1	$	2.3	$	6.4
2022	4.3		2.5		6.8
2023	649.2		2.4		651.6
2024	4.7		0.3		5.0
2025	5.1		—		5.1
Thereafter	3,143.5		—		3,143.5
Total	$	3,810.9	$	7.5	$	3,818.4