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Long-Term and Other Debt
 3 Months Ended
Mar. 31, 2019
Debt Disclosure [Abstract]  
Long-Term and Other Debt
Long-Term and Other Debt
2026 Unsecured Notes

On March 19, 2019, SGI issued $1,100 million in aggregate principal amount of its new 2026 Unsecured Notes at an issue price of 100.000% in a private offering. We used the net proceeds of the 2026 Unsecured Notes offering to redeem $1,000 million of our outstanding 2022 Unsecured Notes and pay accrued and unpaid interest thereon plus related premiums, fees, and costs, which redemption was completed on April 4, 2019, and pay related fees and expenses of the 2026 Unsecured Notes offering. The redemption of the 2022 Unsecured Notes will result in an approximate $60 million loss on debt financing transactions during the second quarter of 2019.
The 2026 Unsecured Notes were issued pursuant to an indenture dated as of March 19, 2019 (the “2026 Unsecured Notes Indenture”). SGI may redeem some or all of the 2026 Unsecured Notes at any time prior to March 15, 2022 at a redemption price equal to 100% of the principal amount of the 2026 Unsecured Notes plus accrued and unpaid interest, if any, to the date of the redemption plus a “make whole” premium. SGI may redeem some or all of the 2026 Unsecured Notes at any time on or after March 15, 2022 at the prices specified in the 2026 Unsecured Notes Indenture.
The 2026 Unsecured Notes are senior unsecured obligations of SGI, rank equally to all SGI’s existing and future senior debt and rank senior to all of SGI’s existing and future senior subordinated debt. The 2026 Unsecured Notes are guaranteed on a senior unsecured basis by SGC and all of its wholly owned U.S. subsidiaries (other than SGI, the unrestricted social gaming business entities and certain immaterial subsidiaries). The 2026 Unsecured Notes are structurally subordinated to all of the liabilities of our non-guarantor subsidiaries.
In connection with the 2026 Unsecured Notes offering, we reflected $16 million in financing costs presented primarily as a reduction to long-term debt.
Outstanding Debt and Finance Leases
The following table reflects our outstanding debt:
 
As of
 
March 31, 2019
 
December 31, 2018
 
Final Maturity
 
Rate(s)
 
Face value
 
Unamortized debt discount/premium and deferred financing costs, net
 
Book value
 
Book value
Senior Secured Credit Facilities:
 
 
 
 
 
 
 
 
 
 
 
Revolver, varying interest rate
2020
 
variable

 
$
190

 
$
—

 
$
190

 
$
325

Term Loan B-5
2024
 
variable

 
4,133

 
(69
)
 
4,064

 
4,071

Senior Notes:
 
 
 
 
 
 
 
 
 
 
 
2025 Secured Notes(2)
2025
 
5.000
%
 
1,250

 
(17
)
 
1,233

 
1,233

2026 Secured Euro Notes(3)
2026
 
3.375
%
 
367

 
(5
)
 
362

 
367

2022 Unsecured Notes(4)
2022
 
10.000
%
 
2,200

 
(22
)
 
2,178

 
2,176

2026 Unsecured Euro Notes(3)
2026
 
5.500
%
 
282

 
(4
)
 
278

 
282

    2026 Unsecured Notes
2026
 
8.250
%
 
1,100

 
(16
)
 
1,084

 
—

Subordinated Notes:
 
 
 
 
 
 
 
 
 
 
 
2020 Notes
2020
 
6.250
%
 
244

 
(1
)
 
243

 
242

2021 Notes
2021
 
6.625
%
 
341

 
(3
)
 
338

 
337

Finance lease obligations as of March 31, 2019 payable monthly through 2019 and other(5)
2019
 
3.900
%
 
13

 
—

 
13

 
4

Total long-term debt outstanding
 
 
 
 
$
10,120

 
$
(137
)
 
$
9,983

 
$
9,037

Less: current portion of long-term debt(4)
 
 
 
 
 
 
 
 
(1,046
)
 
(45
)
Long-term debt, excluding current portion
 
 
 
 
 
 
 
 
$
8,937

 
$
8,992

Fair value of debt(1)
 
 
 
 
$
10,197

 
 
 
 
 
 
(1) Fair value of our fixed rate and variable interest rate debt is classified within level 2 in the fair value hierarchy and has been calculated based on the quoted market prices of our securities.
(2) Includes cross-currency interest rate swap agreements that we entered into in 2018 in the amount of $460 million U.S. Dollar-denominated 2025 Secured Notes to a fixed-rate Euro-denominated debt, with a fixed annual weighted average interest rate of approximately 2.946% (see Note 16 in our 2018 10-K).
(3) We designated a portion of our 2026 Secured Euro Notes as a net investment non-derivative hedge of our investments in certain of our international subsidiaries that use the Euro as their functional currency in order to reduce the volatility in our operating results caused by the change in foreign currency exchange rates of the Euro relative to the U.S. Dollar (see Note 12 for additional information). The total change in the face value of the 2026 Secured Euro Notes and 2026 Unsecured Euro Notes due to changes in foreign currency exchange rates since the issuance was a reduction of $63 million, of which a $5 million gain was recognized on remeasurement of debt in the Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2019.
(4) Includes $1,000 million of the principal balance of the 2022 Unsecured Notes that were redeemed on April 4, 2019.
(5) Includes $11 million related to certain revenue transactions presented as debt in accordance with ASC 470-10-25.


We were in compliance with the financial covenants under all debt agreements as of March 31, 2019.
For additional information regarding the terms of our credit agreements, Secured Notes, Unsecured Notes and Subordinated Notes, see Note 16 in our 2018 10-K.
For additional information regarding the SciPlay Revolver that we entered into on May 7, 2019 in connection with the SciPlay IPO, see Note 1.
Loss on Debt Financing Transactions

The following are components of the loss on debt financing transactions resulting from debt extinguishment and modification accounting for three months ended March 31, 2019 and 2018:
 
Three Months Ended March 31,
 
2019
 
2018
Repayment and cancellation of principal balance at premium
$
—

 
$
110

Unamortized debt (premium) discount and deferred financing costs, net
—

 
(30
)
Third party debt issuance fees
—

 
13

Total loss on debt financing transactions
$
—

 
$
93