Debt

12 Months Ended

Dec. 31, 2020

The following table presents White Mountains’s debt outstanding as of December 31, 2020 and 2019:


	December 31,		Effective		December 31,		Effective
$ in Millions	2020		Rate		2019		Rate (1)



NSM Bank Facility	$	277.4	7.5%	(1)	$	221.3	7.5%		(1)
Unamortized issuance cost	(6.1)				(3.9)
NSM Bank Facility, carrying value	271.3				217.4
Other NSM debt	1.3		2.5%		1.8		3.0%
Kudu Bank Facility	89.2		8.3%		57.0		8.3%
Unamortized issuance cost	(2.9)				(3.4)
Kudu Bank Facility, carrying value	86.3				53.6



Other Operations debt	18.0		7.4%		11.1		8.3	%
Unamortized issuance cost	(.5)				(.4)
Other Operations debt, carrying value	17.5				10.7
Total debt	$	376.4			$	283.5

(1) Effective rate includes the effect of the amortization of debt issuance costs and excludes the effect of the interest rate swap on the hedged portion of the debt. The weighted average interest rate for the years ended December 31, 2020 and 2019, excluding the effect of the amortization of debt issuance costs, was 7.0% and 7.0%. The weighted average interest rate for the years ended December 31, 2020 and 2019 on the total NSM Bank Facility including both the effect of the amortization of debt issuance costs and the effect of the interest rate swap was 8.4% and 8.1%.

The following table presents a schedule of contractual repayments of White Mountains’s debt as of December 31, 2020:


Millions	December 31, 2020
Due in one year or less	$	4.5
Due in two to three years	12.2
Due in four to five years	106.0
Due after five years	263.3
Total	$	386.0

NSM Bank Facility

On April 7, 2020, NSM amended its secured credit facility (the “NSM Bank Facility”) with Ares Capital Corporation in connection with the acquisition of Kingsbridge. Under the amendment, the total commitment increased from $234.0 million, comprised of term loans of $224.0 million and a revolving credit loan of $10.0 million, to $291.4 million, comprised of term loans of $276.4 million, including £42.5 million (approximately $52.4 million based upon the foreign exchange spot rate as of the date of the transaction) in a GBP term loan, and a revolving credit loan commitment of $15.0 million. The term loans under the NSM Bank Facility mature on May 11, 2026, and the revolving loan matures on November 11, 2025.

Under GAAP, if the terms of a debt instrument are amended, unless there is greater than 10% change in the expected discounted future cash flows of such instrument, the instrument’s carrying value does not change. White Mountains has determined that the impact of the changes to the terms of the NSM Bank Facility on the expected discounted future cash flows was less than 10%.

Interest on the NSM Bank Facility accrues at a floating interest rate equal to the three-month LIBOR plus an applicable margin. In connection with the amendment, the reference rates for USD denominated borrowings increased. The USD-LIBOR rate floor increased to 1.25% and the margin over USD-LIBOR increased from a range of 4.25% to 4.75% to a range of 5.50% to 6.00%. For GBP denominated borrowings, the GBP-LIBOR rate floor is 1.25% and the margin over GBP-LIBOR ranges from 6.00% to 6.50%. The margins over the reference interest rates vary within the range depending on the consolidated total leverage ratio of NSM.

The following table presents the change in debt under the NSM Bank Facility for the years ended December 31, 2020 and 2019:


Millions	Year Ended December 31,
NSM Bank Facility	2020		2019
Beginning balance	$	221.3	$	180.4
Term loans
Borrowings (1)	52.4		42.9
Repayments	(2.0)		(2.0)
Foreign currency translation	5.7		—
Revolving credit loan
Borrowings	—		6.5
Repayments	—		(6.5)
Ending balance	$	277.4	$	221.3

(1) Borrowings for the year ended December 31, 2020 included $52.4 for the funding of the acquisition of Kingsbridge. Borrowings for the year ended December 31, 2019 included $20.4 and $22.5 for the funding of the acquisitions of Embrace and the Renewal Rights.

As of December 31, 2020, the term loans had an outstanding balance of $277.4 million, including £42.5 million (approximately $58.1 million based upon the foreign exchange spot rate as of December 31, 2020) in a GBP term loan, and the revolving credit loan was undrawn.

On June 15, 2018, NSM entered into an interest rate swap agreement to hedge its exposure to interest rate risk on $151.0 million of its USD denominated variable rate term loans.

As of December 31, 2020, $147.6 million of the outstanding term loans were hedged by the swap and $129.8 million of the outstanding term loans were unhedged. For the twelve months ended December 31, 2020, the weighted average effective interest rate on the outstanding term loans that were hedged, including the effect of the amortization of debt issuance costs and the effect of the interest rate swap, was 9.0%, and the weighted average effective interest rate on the outstanding term loans that were unhedged, including the effect of the amortization of debt issuance costs, was 7.6%. For the twelve months ended December 31, 2020, the weighted average interest rate on the total NSM Bank Facility, including the effect of the amortization of debt issuance costs and the effect of the interest rate swap, was 8.4%.

The NSM Bank Facility is secured by all property of the loan parties and contains various affirmative, negative and financial covenants that White Mountains considers to be customary for such borrowings, including a maximum consolidated total leverage ratio covenant.

Other NSM Debt

NSM also has a secured term loan related to its U.K. vertical. As of December 31, 2020, the secured term loan had an outstanding balance of $1.3 million and a maturity date of December 31, 2022.

Kudu Bank Facility

On December 23, 2019, Kudu entered into a secured credit facility (the “Kudu Bank Facility”) with Monroe Capital Management Advisors, LLC to provide funding for distributions to unitholders and fund new investments and related transaction expenses. As of December 31, 2020, the Kudu Bank Facility has a maximum borrowing capacity of $124.0 million, which is comprised of a revolving credit loan commitment of $5.0 million, an initial term loan of $57.0 million and a delayed-draw term loan of $62.0 million. The term loans and revolving credit loans, under the Kudu Bank Facility, mature in 2025. During 2020, Kudu borrowed $32.2 million in term loans under the Kudu Bank Facility and made no repayments. During 2019, Kudu borrowed $57.0 million in term loans under the Kudu Bank Facility and made no repayments. As of December 31, 2020, the term loans had an outstanding balance of $89.2 million and the revolving credit loan was undrawn.

Interest on the Kudu Bank Facility accrues at a floating interest rate equal to the greater of the one-month USD-LIBOR and 1.0% or the Prime Rate plus 1.0%, plus in each case, an applicable margin. The margin over USD-LIBOR may vary between 5.50% and 6.25% and the margin over the base rate may vary between 4.50% and 5.25%, depending on the consolidated total leverage ratio of the borrower.

The Kudu Bank Facility is secured by all property of the loan parties and contains various affirmative, negative and financial covenants that White Mountains considers to be customary for such borrowings, including a maximum consolidated total leverage ratio covenant.

Other Operations Debt

As of December 31, 2020, debt in White Mountains’s Other Operations segment consisted of two secured credit facilities. The first credit facility has a maximum borrowing capacity of $16.3 million, which is comprised of a term loan of $11.3 million, a delayed-draw term loan of $3.0 million and a revolving credit loan commitment of $2.0 million, all with a maturity date of March 12, 2024. During 2020, White Mountains’s Other Operations segment made no borrowings and made repayments of $2.0 million on the term loans under the first credit facility. During 2019, the first credit facility had no borrowings and made repayments of $0.2 million on the term loans. As of December 31, 2020, the term loans had an outstanding balance of $9.1 million and the revolving credit loan was undrawn. The second credit facility has a maximum borrowing capacity of $15.0 million, which is comprised of a term loan of $9.0 million, a delayed-draw term loan of $4.0 million and a revolving credit loan commitment of $2.0 million, all with a maturity date of July 2, 2025. During 2020, White Mountains’s Other Operations segment had no borrowings and made repayments of $0.1 million on the term loans under the second credit facility. As of December 31, 2020, the term loans had an outstanding balance of $8.9 million and the revolving credit loan was undrawn.

Compliance

As of December 31, 2020, White Mountains was in compliance in all material respects with all of the covenants under all of its debt facilities.

Interest

Total interest expense incurred by White Mountains for its indebtedness was $29.5 million, $17.6 million and $9.5 million for the periods ended December 31, 2020, 2019 and 2018. Total interest paid by White Mountains for its indebtedness was $27.0 million, $16.3 million, and $8.8 million for the twelve months ended December 31, 2020, 2019 and 2018.