LONG-TERM DEBT

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

LONG-TERM DEBT

11. LONG-TERM DEBT

New Senior Secured Credit Facilities

Concurrent with the Merger, we obtained new senior secured credit facilities in an aggregate principal amount of up to $2.85 billion, consisting of (a) a $600 million senior secured revolving facility and (b) a $2.25 billion senior secured term loan, which are collectively referred to as the “New Senior Secured Credit Facilities”.

Our obligations under our New Senior Secured Credit Facilities are secured by certain of our assets and are guaranteed by certain of our subsidiaries. They contain certain affirmative covenants and negative covenants customary for senior secured financings. The New Revolving Facility is also subject to a financial covenant on a maximum first lien net leverage ratio, which will be tested only at the end of any fiscal quarter when the aggregate outstanding loan amount and letters of credit under the New Revolving Facility (taking into account certain deductions and adjustments) exceeds a certain pre-agreed percentage of the outstanding commitments under the New Revolving Facility at that time.

New Revolving Facility

The New Revolving Facility expires on November 1, 2024 and bears interest at either (i) a London Interbank Offered Rate determined by reference to the relevant interest period, adjusted for statutory reserve requirements (“LIBOR”), plus an applicable margin initially at 1.25% per annum and that will subsequently range from 1.00% per annum to 2.00% per annum based on a pricing grid by reference to the first lien net leverage ratio of Buckeye; or (ii) a base rate determined in accordance with the credit agreement establishing the New Senior Secured Credit Facilities (the “base rate”) plus an applicable margin initially at 0.25% per annum and that will subsequently range from 0% per annum to 1.00% per annum based on a pricing grid as determined by reference to the applicable first lien net leverage ratio of Buckeye. The unused portion of the New Revolving Facility, less letters of credit issued under the New Revolving Facility, is subject to a quarterly commitment fee at a percentage of such unused portion, ranging from 0.15% per annum to 0.40% per annum (determined daily in accordance with a pricing grid by reference to the first lien net leverage ratio of Buckeye). Quarterly letter of credit fees will accrue and be payable to each lender at a percentage of such lender’s exposure to the letters of credit issued under the New Revolving Facility, ranging from 1.00% per annum to 2.00% per annum (determined daily in accordance with a pricing grid by reference to the first lien net leverage ratio of Buckeye).

New Term Facility

Our New Term Facility matures at November 1, 2026. The interest rate options for the New Term Facility are (i) LIBOR plus an applicable margin of 2.75% per annum or (ii) the base rate plus an applicable margin of 1.75% per annum. The New Term Facility will, commencing with the second full fiscal quarter ending after the consummation of the Merger, amortize in aggregate annual amounts equal to 1.00% of its original principal amount, payable in equal quarterly installments, with the balance becoming due on the maturity date of the New Term Facility.

In conjunction with the Merger, we entered into a series of interest rate swap derivative contracts with a total aggregate notional amount of approximately $1.69 billion to hedge the cash flow associated with the New Term Facility variable rate debt.

Prior $1.5 billion Credit Facility

At the closing of the Merger, Buckeye terminated and paid in full the Prior $1.5 billion Credit Facility. At September 30, 2019, we had a $159.0 million outstanding balance under the Prior $1.5 billion Credit Facility, $79.0 million of which was classified as current. The weighted average interest rate for borrowings under the Prior $1.5 billion Credit Facility was 3.8% during the nine months ended September 30, 2019.

Extinguishment of Debt

In January 2018, we repaid in full the $300.0 million principal amount outstanding under our 6.050% notes.

In January 2019, we repaid in full the $250.0 million variable-rate Term Loan due September 30, 2019 (the “Prior $250 million Term Loan”), using proceeds from the VTTI sale transaction.

In February 2019, we repaid in full the $275.0 million principal amount outstanding under our 5.500% notes, using proceeds from the VTTI sale transaction as well as borrowings under our Prior $1.5 billion Credit Facility.

As a result of the 2019 debt retirements, we incurred a $4.0 million loss on early extinguishment of debt, consisting of a $3.6 million make-whole payment related to the 5.500% notes and unamortized financing costs of $0.4 million included in Other expense, net, on our unaudited condensed consolidated statements of operations.

Other Notes Offerings

In January 2018, we issued $400.0 million of junior subordinated notes (“Junior Notes”) maturing on January 22, 2078, which are redeemable at Buckeye’s option, in whole or in part, on or after January 22, 2023. The Junior Notes bear interest at a fixed rate of 6.375% per year up to, but not including, January 22, 2023. From January 22, 2023, the Junior Notes will bear interest at a floating rate based on the Three-Month LIBOR plus 4.02%, reset quarterly. Total proceeds from this offering, after underwriting fees, expenses, and debt issuance costs, were $394.9 million. We used the net proceeds from this offering to reduce indebtedness outstanding under our Prior $1.5 billion Credit Facility and for general partnership purposes.