Debt and Credit Facilities

The following table presents the composition of the Company’s debt and financial services credit facilities:



(in thousands)	JUNE 30, 2015			DECEMBER 31, 2014
Senior notes
5.4 percent senior notes due January 2015	$	—		$	126,481
8.4 percent senior notes due May 2017	230,000			230,000
6.6 percent senior notes due May 2020	300,000			300,000
5.4 percent senior notes due October 2022	250,000			250,000
Convertible senior notes
1.6 percent convertible senior notes due May 2018	225,000			225,000
0.25 percent convertible senior notes due June 2019	267,500			267,500
Total senior notes and convertible senior notes	1,272,500			1,398,981
Debt discount	(1,342		)	(1,673		)
Senior notes and convertible senior notes, net	1,271,158			1,397,308
Secured notes payable	24,795			5,771
Total debt	$	1,295,953		$	1,403,079
Financial services credit facilities	$	122,607		$	129,389

Each of the senior notes pays interest semiannually and all, except for the convertible senior notes due May 2018 and June 2019, may be redeemed at a stated redemption price, in whole or in part, at the option of the Company at any time. The Company’s obligations to pay principal, premium and interest under its senior notes and convertible senior notes are guaranteed on a joint and several basis by substantially all of its direct and indirect wholly owned homebuilding subsidiaries. Such guarantees are full and unconditional. (See Note 20, “Supplemental Guarantor Information.”)

During the first quarter of 2015, the Company used existing cash of $126.5 million to settle its 5.4 percent senior notes that matured.

To finance its land purchases, the Company may also use nonrecourse secured notes payable. At June 30, 2015 and December 31, 2014, outstanding nonrecourse secured notes payable totaled $24.8 million and $5.8 million, respectively.

Senior notes, convertible senior notes, credit facilities and indenture agreements are subject to certain covenants that include, among other things, restrictions on additional secured debt and the sale of assets. The Company was in compliance with these covenants at June 30, 2015.

During 2014, the Company entered into a four-year unsecured revolving credit facility agreement (the “Credit Facility”). The Credit Facility provides for a $300.0 million revolving credit facility (the “Revolving Credit Facility”), which includes a $150.0 million letter of credit subfacility (the “Letter of Credit Subfacility”) and a $25.0 million swing line facility. In addition, the Credit Facility includes an accordion feature pursuant to which the commitments under the Revolving Credit Facility may be increased, from time to time, up to a principal amount not to exceed $450.0 million, subject to the terms and conditions set forth in the agreement. The commitments for the Letter of Credit Subfacility are not to exceed half of the amount of the commitments for the Revolving Credit Facility. The Credit Facility, which matures on November 21, 2018, provides for the commitments to be extended for up to two additional one-year periods, subject to satisfaction of the terms and conditions set forth therein.

The obligation of the lenders to make advances or issue letters of credit under the Credit Facility is subject to the satisfaction of certain conditions set forth in the credit agreement. If the leverage ratio of the Company and its homebuilding segment subsidiaries exceeds certain thresholds as set forth in the Credit Facility, availability under the Revolving Credit Facility will be subject to a borrowing base as set forth in the agreement.

The Credit Facility contains various representations and warranties, as well as affirmative, negative and financial covenants that the Company considers customary for financings of this type. The financial covenants in the Credit Facility include a maximum leverage ratio covenant; a minimum net worth test; and a minimum interest coverage test or a minimum liquidity test. The financial services segment subsidiaries of the Company are unrestricted subsidiaries under the Credit Facility and certain covenants of the agreement do not apply to the unrestricted subsidiaries. The Credit Facility includes event of default provisions that the Company considers customary for financings of this type. If an event of default under the Credit Facility occurs and is continuing, the commitments under the agreement may be terminated; the amounts outstanding, including all accrued interest and unpaid fees, may be declared payable immediately; and the Company may be required to cash collateralize the outstanding letters of credit issued under this facility. The Credit Facility will be used for general corporate purposes. Certain letters of credit issued and outstanding prior to the Company’s entry into the Credit Facility have been deemed letters of credit under the facility and made subject to its terms. Amounts borrowed under the Credit Facility are guaranteed on a joint and several basis by substantially all of the Company’s 100 percent-owned homebuilding subsidiaries. Such guarantees are full and unconditional. (See Note 20, “Supplemental Guarantor Information.”)

Outstanding borrowings under the Credit Facility will bear interest at a fluctuating rate per annum that is equal to the base rate or the reserve-adjusted LIBOR rate in each case, plus an applicable margin that is determined based on changes in the leverage ratio of the Company and its homebuilding segment subsidiaries. The Company did not have any outstanding borrowings against the Revolving Credit Facility at June 30, 2015 or December 31, 2014. The Company provides letters of credit in the ordinary course of its business. Under the Letter of Credit Subfacility, the Company had unsecured letters of credit outstanding that totaled $86.5 million and $67.7 million at June 30, 2015 and December 31, 2014, respectively. The unused borrowing capacity of the Credit Facility totaled $213.5 million and $232.3 million at June 30, 2015 and December 31, 2014, respectively.

Additionally, the Company has various secured letter of credit agreements that require it to maintain restricted cash deposits for outstanding letters of credit. Outstanding letters of credit requiring restricted cash deposits totaled $17.5 million and $33.3 million under these agreements at June 30, 2015 and December 31, 2014, respectively.

During 2014, RMCMC entered into a $50.0 million warehouse line of credit with Comerica Bank, which was subsequently extended in April 2015 to expire in April 2016, and allows for borrowings of $50.0 million to $100.0 million, subject to the terms and conditions set forth in the agreement. This facility is used to fund, and is secured by, mortgages originated by RMCMC that are pending sale. Under the terms of this facility, RMCMC is required to maintain various financial and other covenants and to satisfy certain requirements relating to the mortgages securing the facility. At June 30, 2015, RMCMC was in compliance with these covenants. Outstanding borrowings against the credit facility totaled $63.3 million and $48.5 million at June 30, 2015 and December 31, 2014, respectively, with a weighted-average effective interest rate of 3.0 percent at June 30, 2015 and December 31, 2014.

During 2011, RMCMC entered into a $50.0 million repurchase credit facility with JPMorgan Chase Bank, N.A. (“JPM”), which was subsequently increased to $100.0 million during 2014 and will expire in November 2015. This facility is used to fund, and is secured by, mortgages originated by RMCMC that are pending sale. Under the terms of the facility, RMCMC is required to maintain various financial and other covenants and to satisfy certain requirements relating to the mortgages securing the facility. At June 30, 2015, RMCMC was in compliance with these covenants. Outstanding borrowings against the credit facility totaled $59.3 million and $80.9 million at June 30, 2015 and December 31, 2014, respectively, with weighted-average effective interest rates of 2.9 percent and 3.2 percent at June 30, 2015 and December 31, 2014, respectively.