Long-Term Debt

Long-term debt is as follows (in thousands):



	July 2, 2016			January 2, 2016
ABL Facility due 2021⁽¹⁾	$	55,900		$	148,200
4.0% secured notes due 2021 ($50 million and $0 outstanding principal amount as of July 2, 2016, and January 2, 2016, respectively)	49,877			—
8.500% junior priority secured notes due 2022 ($248.0 million outstanding principal amount as of July 2, 2016, and January 2, 2016)	241,043			240,533
6.000% senior priority secured notes due 2019 ($540.0 million outstanding principal amount as of July 2, 2016, and January 2, 2016)	528,342			526,533
6.000% senior unsecured notes due 2024 ($104.5 million and $0 outstanding principal amount as of July 2, 2016, and January 2, 2016, respectively)	84,709			—
11.5% senior notes due 2017 ($40.5 million and $199.7 million outstanding principal amount as of July 2, 2016, and January 2, 2016, respectively)	39,970			195,846
7% senior exchangeable notes due 2017 ($32.2 million and $83.3 million outstanding principal amount as of July 2, 2016, and January 2, 2016, respectively)	31,973			82,430
Other debt including capital leases	12,818			15,081
	1,044,632			1,208,623
Less current maturities	(77,630		)	(5,373		)
Long-term debt	$	967,002		$	1,203,250

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⁽¹⁾The weighted average interest rate outstanding for the ABL Facility was 3.5% and 2.8% as of July 2, 2016, and January 2, 2016, respectively.

The estimated fair value of the Company’s outstanding indebtedness was approximately $885.4 million and $895.7 million as of July 2, 2016, and January 2, 2016, respectively. The fair value was determined by the Company to be Level 2 under the fair value hierarchy, and was based upon review of observable pricing in secondary markets for each debt instrument.

As of July 2, 2016, the Company was in compliance with all covenants under its long-term debt.

Exchange Offer

On June 10, 2016, the Company's wholly-owned subsidiary, Cenveo Corporation (the “Subsidiary Issuer”) closed its exchange offer (the “Exchange Offer”) whereby $149.3 million, or approximately 80%, of its outstanding 11.5% senior notes due 2017 (the “11.5% Notes“) were exchanged for $104.5 million of newly issued 6.000% senior unsecured notes due 2024 (the “6.000% Unsecured Notes”) and warrants (the “Warrants”) to purchase shares of Common Stock, representing in the aggregate 16.6% of the outstanding Common Stock as of June 10, 2016. Subsequent to the Exchange Offer, $40.5 million of 11.5% Notes remained outstanding as of July 2, 2016. Included in the total amount exchanged is $4.2 million of 11.5% Notes owned by affiliated noteholders, whose notes were exchanged for 6.000% Unsecured Notes and Warrants pursuant to a simultaneous and separately negotiated securities exchange agreement. In connection with the Exchange Offer, the Company capitalized debt issuance costs of $7.4 million, all of which will be amortized over the life of the 6.000% Unsecured Notes, and of which $7.3 million is unamortized at July 2, 2016.

For accounting purposes, the Exchange Offer was treated as an extinguishment of the 11.5% Notes and the issuance of the new 6.000% Unsecured Notes. Upon extinguishment, the net carrying amount of the 11.5% Notes was written off and the 6.000% Unsecured Notes were recorded at fair value based on market comparable transactions at the time of the Exchange Offer. The fair value of the 6.000% Unsecured Notes was based on market value pricing, using observable market-based data for similar issuances (Level 2). The Company estimates the fair value of the 6.000% Unsecured Notes on the date of issuance was $92.0 million. The discount of $12.5 million was recorded as an offset to the gain on early extinguishment of debt, net, and will be amortized over the life of the 6.000% Unsecured Notes using the effective interest method.

The 6.000% Unsecured Notes were issued pursuant to an Indenture, dated as of June 10, 2016 (the “Indenture”), among the Company, Subsidiary Issuer, the other guarantors party thereto and The Bank of New York Mellon (“BNY Mellon”), as trustee. The 6.000% Unsecured Notes will mature on May 15, 2024. Interest on the 6.000% Unsecured Notes is payable semi-annually in arrears on May 15 and November 15 of each year, commencing November 15, 2016. The 6.000% Unsecured Notes and the related guarantees are the Subsidiary Issuer's and the guarantors’ senior unsecured obligations. The 6.000% Unsecured Notes are fully and unconditionally guaranteed on a senior basis by the Company and by certain of its existing and future U.S. subsidiaries (other than the Subsidiary Issuer) and, under certain circumstances, certain of its future Canadian subsidiaries. As such, the 6.000% Unsecured Notes rank pari passu with the Subsidiary Issuer's and the guarantors’ existing and future senior indebtedness, senior to the Subsidiary Issuer's and the guarantors’ future indebtedness that is expressly subordinated to the 6.000% Unsecured Notes, effectively junior to the Subsidiary Issuer's and the guarantors’ existing and future indebtedness that is secured by liens to the extent of the value of the collateral securing such indebtedness and structurally subordinated to all of the existing and future liabilities, including trade payables, of the Company’s subsidiaries that do not guarantee the 6.000% Unsecured Notes. The Indenture contains a number of covenants which, among other things, restrict, subject to certain exceptions, the Company's ability and the ability of the Subsidiary Issuer and the other subsidiaries of Company to incur additional indebtedness; declare or pay dividends, redeem stock or make other distributions to shareholders; purchase or prepay subordinated indebtedness; make investments; create liens or use assets as security in other transactions; merge or consolidate, or sell, transfer, lease or dispose of assets; and engage in transactions with affiliates. The Indenture also contains certain customary affirmative covenants and events of default.

The Warrants were issued pursuant to a Warrant Agreement, dated as of June 10, 2016 (the “Warrant Agreement”), between the Company and Computershare Trust Company, N.A., as warrant agent. Each Warrant is currently exercisable for 0.125 shares of Common Stock at $12.00 per share as adjusted as a result of the Company’s recent Reverse Stock Split, subject to mandatory cashless exercise provisions. The number of shares for which a Warrant may be exercised and the exercise price are subject to adjustment in certain events. The Warrants will be exercisable at any time prior to their expiration on June 10, 2024. The Company used the Black-Scholes-Merton option-pricing model, which resulted in a fair value of $6.3 million for the Warrants. The Company recorded the fair value in paid-in capital in the Company's consolidated balance sheet.

In connection with the issuance of the Warrants, the Company and Allianz Global Investors U.S. LLC (“Allianz”) entered into a Warrant Registration Rights Agreement, dated as of June 10, 2016 (the “Registration Rights Agreement”), pursuant to which the Company has agreed to file a shelf registration statement covering the resale of the Warrants and the shares of Common Stock to be issued upon exercise of the Warrants. Under the Registration Rights Agreement, the Company is obligated to cause to be filed such shelf registration agreement on or prior to November 21, 2016 and to use its commercially reasonable efforts to have such registration statement declared effective within 60 days after the initial date of filing thereof, and to keep such shelf registration statement effective until the earlier of (i) the fifth anniversary of the effective date of the shelf registration statement and (ii) the date all transfer restricted securities covered by the shelf registration statement have been sold as contemplated in the shelf registration statement. If the Company fails to satisfy its obligations under the Registration Rights Agreement, it will be required to pay liquidated damages to the holders of the Warrants under certain circumstances.

ABL Amendment

Concurrent with the Exchange Offer, the Company and Subsidiary Issuer entered into Amendment No. 4, dated as of June 10, 2016 (the “ABL Amendment No. 4”), to the Subsidiary Issuer's asset-based revolving credit facility (the “ABL Facility”), which, among other things, extends the term of the ABL Facility through 2021 and reduces the commitments thereunder by $50 million to $190 million. The ABL Facility now matures in June 2021, with a springing maturity of May 2019 ahead of the Subsidiary Issuer's existing 6.000% senior priority secured notes due 2019 (the “6.000% Secured Notes”) in the event that more than $10.0 million of the 6.000% Secured Notes remain outstanding at such time. In connection with this amendment, the Company capitalized debt issuance costs of $2.3 million.

Indenture and Note Purchase Agreement

Concurrent with the Exchange Offer, the Company and Subsidiary Issuer also entered into a secured Indenture and Note Purchase Agreement, dated as of June 10, 2016 (the “Indenture and Note Purchase Agreement”), with certain affiliates of or funds managed by Allianz (collectively, the “Purchasers”), pursuant to which Subsidiary Issuer issued 4% secured notes to the Purchasers in an aggregate principal amount of $50.0 million (the “4% Secured Notes”) at par, the proceeds of which were applied to reduce the outstanding principal amount under the ABL Facility. The 4% Secured Notes mature in December 2021, with a springing maturity of May 2019 ahead of the 6.000% Secured Notes. The 4% Secured Notes bear interest at 4% per annum, payable quarterly in arrears on the last day of March, June, September and December in each year, commencing September 30, 2016, and are secured by the same collateral that secures the ABL Facility, the 6.000% Secured Notes and the Subsidiary Issuer's existing 8.500% junior priority secured notes due 2022 (the “8.500% Notes”). With respect to the ABL Facility, the 4% Secured Notes rank junior with respect to all collateral up to a certain maximum principal amount of the ABL Facility. With respect to the 6.000% Secured Notes, the 4% Secured Notes rank junior with respect to notes priority collateral and senior with respect to ABL Facility priority collateral. With respect to the 8.500% Notes, the 4% Secured Notes rank senior with respect to all collateral. Such ranking of the 4% Secured Notes with respect to the 6.000% Secured Notes and the 8.500% Notes is the same ranking that the ABL Facility has with such notes. The Indenture and Note Purchase Agreement contains a number of covenants which, among other things, restrict, subject to certain exceptions, the Company’s ability and the ability of the Subsidiary Issuer and the other subsidiaries of the Company to incur additional indebtedness; declare or pay dividends, redeem stock or make other distributions to shareholders; purchase or prepay certain specified indebtedness; dispose of assets; make investments; grant liens on assets; merge or consolidate or transfer certain assets; and engage in transactions with affiliates. The Indenture and Note Purchase Agreement also contains certain customary affirmative covenants. In connection with the issuance of the 4% Secured Notes, the Company capitalized debt issuance costs of $0.1 million.

7% Note Purchase Agreement

In addition, on July 18, 2016, the Company, Subsidiary Issuer and Allianz completed the last transactions contemplated by the Support Agreement, dated as of May 10, 2016, among the Company, Subsidiary Issuer and Allianz, pursuant to which Allianz agreed to, among other things, tender and sell to Subsidiary Issuer all of its 7% Notes owned by Allianz in the aggregate principal amount of $37.5 million in exchange for: (a) payment in cash in an amount equal to (i) the aggregate principal amount of such 7% Notes multiplied by 0.6 plus (ii) an amount of interest on the amount payable pursuant to the immediately preceding clause (i) at an annual interest rate of 7% per annum, such interest accruing from June 10, 2016 until (and including) the closings of the purchases and computed based on a year of 360 days; (b) payment in cash of interest that shall have accrued in respect of such 7% Notes in accordance with the indenture relating to such 7% Notes but remained unpaid at the closings of the purchases; and (c) delivery to Allianz of Warrants to purchase Common Stock, representing in the aggregate 3.3% of the outstanding Common Stock as of June 10, 2016.

In connection with such agreement, during the second quarter of 2016, the Subsidiary Issuer repurchased an aggregate of $16.5 million of its 7% Notes for $10.1 million and issued an aggregate of 984,342 Warrants. Additionally, during the third quarter of 2016, the Subsidiary Issuer repurchased an aggregate of $21.0 million of its 7% Notes for $13.0 million, and will recognize a gain on early extinguishment of debt of $7.4 million during the third quarter of 2016, and issued an aggregate of 1,255,485 Warrants.

Extinguishments

In the second quarter of 2016, the Company recorded a gain on early extinguishment of debt of $46.1 million related to the Exchange Offer, of which $49.6 million related to a discount on the difference of the net carrying value of the extinguished 11.5% Notes and the fair value of the new 6.000% Unsecured Notes, partially offset by a write-off of unamortized debt issuance costs of $0.8 million, a write-off of original issuance discount of $1.2 million and $1.5 million of transaction fees and expenses. Additionally, $1.2 million of gain on early extinguishment of debt related to the $4.2 million exchange by affiliated noteholders was recorded as a component of paid-in capital, all of which related to a discount on the Exchange Offer.

During the second quarter of 2016, the Company recorded a gain on early extinguishment of debt of $5.4 million related to the repurchase of $16.5 million of its 7% Notes, of which $6.0 million related to a discount on the purchase price, partially offset by $0.5 million in fees paid to lenders, and a write off of unamortized debt issuance costs of $0.1 million. Additionally, during the second quarter of 2016, in connection with ABL Amendment No. 4, the Company recorded a loss on early extinguishment of debt of $0.2 million related to the write off of unamortized debt issuance costs.

In the first quarter of 2016, the Company recorded a gain on early extinguishment of debt of $16.5 million related to the repurchase of $51.0 million of its 7% Notes, of which $16.8 million related to a discount on the purchase price, partially offset by a write-off of unamortized debt issuance costs of $0.3 million. Additionally, the Company recorded a gain on early extinguishment of debt of $5.1 million related to the repurchase of $10.0 million of its 11.5% Notes, of which $5.3 million related to a discount on the purchase, partially offset by a write-off of unamortized debt issuance costs of $0.1 million and a write-off of original issuance discount of $0.1 million.

In the second quarter of 2015, the Company recorded a loss on early extinguishment of debt of $0.1 million related to the repurchase of $6.8 million of its 11.5% Notes.

In the first quarter of 2015, the Company recorded a loss on early extinguishment of debt of $0.4 million related to the repurchase of $15.8 million of its 11.5% Notes, of which $0.2 million related to the write-off of unamortized debt issuance costs, and $0.2 million related to the write-off of original issuance discount.

The Company recognized a total gain on early extinguishment of debt of $51.3 million and $72.9 million during the three and six months ended July 2, 2016, respectively, and a total loss on early extinguishment of debt of $0.1 million and $0.6 million during the three and six months ended June 27, 2015, respectively.