Long-Term Debt and Note Payable - Affiliate

9 Months Ended

Sep. 30, 2020

Long-Term Debt and Note Payable - Affiliate

The following chart reflects (i) the consolidated long-term debt of Qwest Corporation and its subsidiaries, including finance lease and other obligations, unamortized premiums, net, unamortized debt issuance costs and (ii) note payable - affiliate:


	Interest Rates (1)	Maturities (1)	September 30, 2020		December 31, 2019
			(Dollars in millions)
Senior notes	6.125% - 7.750%	2021 - 2057	$	4,105	5,956
Term loan (2)	LIBOR + 2.00%	2025	100		100
Finance lease and other obligations	Various	Various	5		10
Unamortized premiums, net			5		—
Unamortized debt issuance costs			(88)		(115)
Total long-term debt			4,127		5,951
Less current maturities			(1)		(1,105)
Long-term debt, excluding current maturities			$	4,126	4,846
Note payable - affiliate	4.974%	2022	$	1,130	1,069

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(1)As of September 30, 2020.

(2)Qwest Corporation's Term Loan had an interest rate of 2.150% as of September 30, 2020 and 3.800% as of December 31, 2019.

Long-Term Debt Maturities

Set forth below is the aggregate principal amount of our long-term debt as of September 30, 2020 (excluding unamortized premiums and discounts and unamortized debt issuance costs and excluding note payable-affiliate) maturing during the following years:


	(Dollars in millions)
2020 (remaining three months)	$	—
2021	951
2022	1
2023	1
2024	1
2025 and thereafter	3,256
Total long-term debt	$	4,210

Redemption of Senior Notes

On September 16, 2020, Qwest Corporation partially redeemed $250 million aggregate principal amount of its outstanding 6.625% Notes due 2055 (the "6.625% Notes"). On August 7, 2020, Qwest Corporation completed the redemption of the remaining $300 million aggregate principal amount of its outstanding 6.875% Notes due 2054 (the "6.875% Notes").

On June 29, 2020, Qwest Corporation partially redeemed $200 million aggregate principal amount of its outstanding 6.875% Notes. On January 15, 2020, Qwest Corporation fully redeemed all $850 million aggregate principal amount of its outstanding 6.875% senior notes due 2033 and all $250 million aggregate principal amount of its outstanding 7.125% senior notes due 2043. Through the nine months ended September 30, 2020, redemptions of senior notes resulted in a loss of $36 million.

Note Payable - Affiliate

Qwest Corporation is currently indebted to an affiliate of our ultimate parent company, CenturyLink, Inc., under a revolving promissory note that provides Qwest Corporation with a funding commitment of up to $965 million in aggregate principal amount (the "Intercompany Note"). The outstanding principal balance owed by Qwest Corporation under the Intercompany Note and the accrued interest thereon is due and payable on demand, but if no demand is made, then on June 30, 2022. Interest is accrued on the outstanding principal balance during the respective interest period using a weighted average per annum interest rate on the consolidated outstanding debt of CenturyLink, Inc. and its subsidiaries. As of September 30, 2020, the Intercompany Note had an outstanding balance of $1.13 billion and bore interest at a weighted-average interest rate of 4.974%. As of September 30, 2020 and December 31, 2019, the Intercompany Note is reflected on our consolidated balance sheets as a current liability under "Note payable - affiliate". In accordance with the terms of the Intercompany Note, interest shall be assessed on June 30th and December 31st (an "Interest Period"). Any assessed interest for an Interest Period that remains unpaid on the last day of the subsequent Interest Period is to be capitalized on such date and is to begin accruing interest. Through September 30, 2020, $165 million of such interest has been capitalized since entering into the Intercompany Note. As of September 30, 2020, $14 million of accrued interest is reflected in other current liabilities on our consolidated balance sheet.

Compliance

As of September 30, 2020, we believe we were in compliance with the financial covenants contained in our material debt agreements in all material respects.

Other

For additional information on our long-term debt and credit facilities, see Note 5—Long-Term Debt and Revolving Promissory Note to our consolidated financial statements in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2019.

Subsequent Events

On October 23, 2020, Qwest Corporation borrowed $215 million under a variable-rate term loan with CoBank ACB and used the resulting net proceeds to pay off its previous $100 million term loan with CoBank ACB. Additionally, on October 26, 2020, Qwest Corporation used the remaining net proceeds to partially facilitate the redemption of the remaining $160 million aggregate principal amount of its outstanding 6.625% Notes, as described below. The new term loan will mature on October 23, 2027, and has terms substantially similar to those contained in the prior term loan with CoBank ACB.

On October 26, 2020, Qwest Corporation redeemed the remaining $160 million aggregate principal amount of its outstanding 6.625% Notes. Following this redemption, there were no bonds outstanding for the 6.625% Notes.