LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS

Summary



	March 31, 2016			December 31, 2015
Senior Debt	$	943,210		$	906,028
Other credit facilities and capital leases	3,677			3,648
Total long-term debt and other financing arrangements	946,887			909,676
Less: current maturities	(1,202		)	(1,155		)
Total non-current long-term debt and other financing arrangements	$	945,685		$	908,521

Financing Transactions

During the three months ended March 31, 2016 we paid US$ 10.0 million of accrued Guarantee Fees (as defined below) for which we had previously made an election to pay in kind by adding such semi-annual Guarantee Fees to any such amount then outstanding. The accrued Guarantee Fee payment is presented as a cash outflow from operating activities in our condensed consolidated statements of cash flows.

On April 7, 2016 we drew the EUR 468.8 million (approximately US$ 533.4 million as of the transaction date) 2021 Euro Term Loan, the proceeds of which, together with cash on hand, were applied toward the repayment of the outstanding US$ 38.2 million of the 15.0% term loan facility due 2017 (the "2017 Term Loan") plus accrued and unpaid interest, and toward the redemption and discharge of the outstanding US$ 502.5 million of the 15.0% Senior Secured Notes due 2017 (the "2017 PIK Notes") plus accrued and unpaid interest. See Note 21, "Subsequent Events".

Overview

Total senior debt and credit facilities comprised the following at March 31, 2016:



	Principal Amount of Liability Component		Debt Issuance Costs			Unamortized Discount			Net Carrying Amount
2017 PIK Notes ⁽¹⁾	$	502,504	$	(2,652	)	$	(128,674	)	$	371,178
2017 Term Loan ⁽²⁾	38,194		(268		)	(9,473		)	28,453
2018 Euro Term Loan	285,536		(742		)	—			284,794
2019 Euro Term Loan	267,930		(9,145		)	—			258,785
2021 Revolving Credit Facility ⁽³⁾	—		—			—			—
Total senior debt and credit facilities	$	1,094,164	$	(12,807	)	$	(138,147	)	$	943,210


⁽¹⁾	The principal amount represents the original principal amount of US$ 400.0 million plus interest paid in kind by adding such amount to the original principal amount. The 2017 PIK Notes were redeemed on April 8, 2016. See Note 21, "Subsequent Events".


⁽²⁾	The principal amount represents the original principal amount of US$ 30.0 million plus interest paid in kind by adding such amount to the original principal amount. The 2017 Term Loan was repaid on April 7, 2016. See Note 21, "Subsequent Events".


⁽³⁾	Debt issuance costs related to the 2021 Revolving Credit Facility are classified as non-current assets in our condensed consolidated balance sheet and are being amortized on a straight-line basis over the life of the 2021 Revolving Credit Facility.

Senior Debt

Our senior debt comprised the following at March 31, 2016 and December 31, 2015:



	Carrying Amount				Fair Value
	March 31, 2016		December 31, 2015		March 31, 2016		December 31, 2015
2017 PIK Notes	$	371,178	$	359,789	$	502,504	$	552,338
2017 Term Loan	28,453		27,592		38,194		41,525
2018 Euro Term Loan	284,794		272,189		285,536		273,046
2019 Euro Term Loan	258,785		246,458		267,930		256,210
	$	943,210	$	906,028	$	1,094,164	$	1,123,119

Euro Term Loans

2018 Euro Term Loan

As at March 31, 2016, the principal amount of our floating rate senior unsecured term credit facility (as amended, the "2018 Euro Term Loan") outstanding was EUR 250.8 million (approximately US$ 285.5 million). The 2018 Euro Term Loan bears interest at three-month EURIBOR (fixed pursuant to customary hedging arrangements (see Note 11, "Financial Instruments and Fair Value Measurements")) plus a margin of between 1.07% and 1.90% depending on the credit rating of Time Warner, and is payable quarterly in arrears on each March 12, June 12, September 12 and December 12. As at March 31, 2016, the interest rate on amounts outstanding under the 2018 Euro Term Loan was 1.50% and the all-in borrowing rate including the Guarantee Fee was 8.50% (as shown in the table under the heading "Interest Rate Summary" below).

The 2018 Euro Term Loan matures on November 1, 2018 and may be prepaid at our option, in whole or in part, without premium or penalty, upon the occurrence of certain events, including if our net leverage (as defined in our Reimbursement Agreement) decreases to below five times for two consecutive quarters, or at any time from November 1, 2017. The 2018 Euro Term Loan is a senior unsecured obligation of CME Ltd., and is unconditionally guaranteed by CME BV and by Time Warner and certain of its subsidiaries.

The fair value of the 2018 Euro Term Loan as at March 31, 2016 approximated its face value. This measurement of estimated fair value uses Level 2 inputs as described in Note 11, "Financial Instruments and Fair Value Measurements". Certain derivative instruments, including contingent event of default and change of control put options, have been identified as being embedded in the 2018 Euro Term Loan. The embedded derivatives are considered clearly and closely related to the Euro Term Loans, and as such are not required to be accounted for separately.

2019 Euro Term Loan

As at March 31, 2016, the principal amount of our floating rate senior unsecured term credit facility (the "2019 Euro Term Loan") outstanding was EUR 235.3 million (approximately US$ 267.9 million). The 2019 Euro Term Loan bears interest at three-month EURIBOR (fixed pursuant to customary hedging arrangements (see Note 11, "Financial Instruments and Fair Value Measurements")) plus a margin of between 1.07% and 1.90% depending on the credit rating of Time Warner, and is payable quarterly in arrears on each February 13, May 13, August 13 and November 13. As at March 31, 2016, the interest rate on amounts outstanding under the 2019 Euro Term Loans was 1.50% and the all-in borrowing rate including the Guarantee Fee was 8.50% (as shown in the table under the heading "Interest Rate Summary" below).

The 2019 Euro Term Loan matures on November 1, 2019 and may be prepaid at our option, in whole or in part, from June 1, 2016, without premium or penalty. The 2019 Euro Term Loan is a senior unsecured obligation of CME Ltd., and is unconditionally guaranteed by CME BV and by Time Warner and certain of its subsidiaries.

The fair value of the 2019 Euro Term Loan as at March 31, 2016 approximated its face value. This measurement of estimated fair value uses Level 2 inputs as described in Note 11, "Financial Instruments and Fair Value Measurements". Certain derivative instruments, including contingent event of default and change of control put options, have been identified as being embedded in the 2019 Euro Term Loan. The embedded derivatives are considered clearly and closely related to the Euro Term Loans, and as such are not required to be accounted for separately.

2021 Euro Term Loan

As at March 31, 2016, our EUR 468.8 million (approximately US$ 533.7 million) floating rate senior unsecured term credit facility (the "2021 Euro Term Loan") was undrawn. On April 7, 2016 we drew on the 2021 Euro Term Loan (see Note 21, "Subsequent Events"). The 2021 Euro Term Loan bears interest at three-month EURIBOR (fixed pursuant to customary hedging arrangements (see Note 11, "Financial Instruments and Fair Value Measurements")) plus a margin of between 1.07% and 1.90% depending on the credit rating of Time Warner, and is payable quarterly in arrears on each April 7, July 7, October 7 and January 7. The all-in borrowing rate, including the Guarantee Fee, applicable to the 2021 Euro Term Loan ranges from 10.50% (if our net leverage ratio is greater than or equal to eight times) to 7.0% per annum (if our net leverage ratio is less than five times). On the date of the drawdown, the all-in borrowing rate on the 2021 Euro Term Loan was 10.50%.

The 2021 Euro Term Loan matures on February 19, 2021 and may be prepaid at our option, in whole or in part, without premium or penalty, upon the earlier of the occurrence of certain events, including if our net leverage (as defined in our Reimbursement Agreement) decreases to below five times for two consecutive quarters, or at any time from February 19, 2020. The 2021 Euro Term Loan is a senior unsecured obligation of CME BV, and is unconditionally guaranteed by CME Ltd. and by Time Warner and certain of its subsidiaries. Certain derivative instruments, including contingent event of default and change of control put options, have been identified as being embedded in the 2021 Euro Term Loan. The embedded derivatives are considered clearly and closely related to the Euro Term Loans, and as such are not required to be accounted for separately.

Reimbursement Agreement and Guarantee Fees

In connection with Time Warner’s guarantees of the 2018 Euro Term Loan, 2019 Euro Term Loan and 2021 Euro Term Loan (collectively, the “Euro Term Loans”), we entered into a reimbursement agreement (as amended, the “Reimbursement Agreement") with Time Warner which provides for the payment of guarantee fees (the "Guarantee Fees") to Time Warner as consideration for those guarantees, and that we will reimburse Time Warner for any amounts paid by them under any guarantee or through any loan purchase right exercised by Time Warner. The loan purchase right allows Time Warner to purchase any amount outstanding under the Euro Term Loans from the lenders following an event of default under the Euro Term Loans or the Reimbursement Agreement. The Reimbursement Agreement is jointly and severally guaranteed by CME NV and CME BV and is secured by a pledge over 100% of the outstanding shares of each of CME NV and CME BV. The covenants and events of default under the Reimbursement Agreement are substantially the same as under the 2021 Revolving Credit Facility.

We are paying Guarantee Fees to Time Warner based on the amounts outstanding on the Euro Term Loans calculated on a per annum basis as shown in the table below. For the three months ended March 31, 2016 and 2015, we recognized US$ 9.1 million and US$ 4.8 million of Guarantee Fees as interest expense in our condensed consolidated statements of operations and comprehensive income / loss.

The Guarantee Fees relating to the 2018 Euro Term Loan and the 2019 Euro Term Loan are payable semi-annually in arrears on each May 1 and November 1, in cash or in kind (by adding such semi-annual Guarantee Fees to any such amount then outstanding). The Guarantee Fees relating to the 2021 Euro Term Loan are payable semi-annually in arrears on each June 1 and December 1, in cash or in kind (by adding such semi-annual Guarantee Fees to any such amount then outstanding) after the first 5.0% (including the base rate and the rate paid pursuant to the hedging arrangement) is paid in cash.

The Guarantee Fees paid in kind are presented as a component of other non-current liabilities (see Note 10, "Other Liabilities") and bear interest per annum at their respective Guarantee Fee rate (as set forth in the table below), payable semi-annually in arrears in cash or in kind (by adding such semi-annual Guarantee Fees to any such amount then outstanding) on each respective payment date. Guarantee Fees paid in cash are included in cash flows from operating activities in our condensed consolidated statements of cash flows.

Interest Rate Summary



	Base Rate		Rate Fixed Pursuant to Interest Rate Hedges		Guarantee Fee Rate		All-in Borrowing Rate
2017 PIK Notes ⁽¹⁾	15.00	%	—	%	—	%	15.00	%
2017 Term Loan ⁽¹⁾	15.00	%	—	%	—	%	15.00	%
2018 Euro Term Loan ⁽²⁾	1.50	%	0.21	%	6.79	%	8.50	%
2019 Euro Term Loan	1.50	%	0.31	%	6.69	%	8.50	%
2021 Euro Term Loan ⁽³⁾	1.50	%	0.28	%	8.72	%	10.50	%


⁽¹⁾	The 2017 PIK Notes were redeemed on April 8, 2016 and the 2017 Term Loan was repaid on April 7, 2016 with the proceeds from the 2021 Euro Term Loan and cash on hand. See Note 21, "Subsequent Events".


⁽²⁾	The rate fixed pursuant to interest rate hedges presented is effective until November 1, 2017. From November 1, 2017 through maturity on November 1, 2018, the rate fixed pursuant to interest rate hedges will decrease to 0.14%, with a corresponding increase in the guarantee fee rate, such that all-in borrowing rate remains 8.50%.


⁽³⁾	The 2021 Euro Term Loan was undrawn as at March 31, 2016. These rates represent the rates in effect on April 7, 2016, the date the 2021 Euro Term Loan was drawn. See Note 21, "Subsequent Events".

2021 Revolving Credit Facility

We had no balance outstanding under the US$ 115.0 million revolving credit facility (the “2021 Revolving Credit Facility”), all of which was available to be drawn as at March 31, 2016.

The 2021 Revolving Credit Facility bears interest at a rate per annum based on, at our option, an alternative base rate plus 8.0% or an amount equal to the greater of (i) an adjusted LIBO rate and (ii) 1.0%, plus, in each case, 9.0%, which we may pay in cash or in kind by adding such accrued interest to the applicable principal amount drawn under the 2021 Revolving Credit Facility. With effect from April 7, 2016, the interest rate on the 2021 Revolving Credit Facility is determined on the basis of our net leverage ratio (as defined in the Reimbursement Agreement) and ranges from 10.0% (if our net leverage is greater than or equal to seven times) to 7.0% per annum (if our net leverage ratio is less than five times). The maturity date of the 2021 Revolving Credit Facility is February 19, 2021 with the available amount decreasing to US$ 50.0 million with effect from January 1, 2018. When drawn, the 2021 Revolving Credit Facility permits prepayment at our option in whole or in part without penalty.

The 2021 Revolving Credit Facility is jointly and severally guaranteed by CME NV and CME BV and is secured by a pledge over 100% of the outstanding shares of each of CME NV and CME BV. The 2021 Revolving Credit Facility agreement contains limitations on CME’s ability to incur indebtedness, incur guarantees, grant liens, pay dividends or make other distributions, enter into certain affiliate transactions, consolidate, merge or effect a corporate reconstruction, make certain investments acquisitions and loans, and conduct certain asset sales. The agreement also contains maintenance covenants in respect of interest cover, cash flow cover and total leverage ratios, and has covenants in respect of incurring indebtedness, the provision of guarantees, making investments and disposals, granting security and certain events of defaults.

Other Credit Facilities and Capital Lease Obligations

Other credit facilities and capital lease obligations comprised the following at March 31, 2016 and December 31, 2015:



	March 31, 2016			December 31, 2015
Credit facilities ^{(1) – (3)}	$	—		$	—
Capital leases	3,677			3,648
Total credit facilities and capital leases	3,677			3,648
Less: current maturities	(1,202		)	(1,155		)
Total non-current credit facilities and capital leases	$	2,475		$	2,493


⁽¹⁾	We have a cash pooling arrangement with Bank Mendes Gans (“BMG”), a subsidiary of ING Bank N.V. (“ING”), which enables us to receive credit across the group in respect of cash balances which our subsidiaries deposit with BMG. Cash deposited by our subsidiaries with BMG is pledged as security against the drawings of other subsidiaries up to the amount deposited.

As at March 31, 2016, we had deposits of US$ 67.8 million in and no drawings on the BMG cash pool. Interest is earned on deposits at the relevant money market rate. As at December 31, 2015, we had deposits of US$ 19.6 million in and no drawings on the BMG cash pool.

⁽²⁾

As at March 31, 2016 and December 31, 2015, there were no drawings outstanding under a CZK 800.0 million (approximately US$ 33.7 million) factoring framework agreement with Factoring Ceska Sporitelna (“FCS”). Under this facility up to CZK 800.0 million (approximately US$ 33.7 million) of receivables from certain customers in the Czech Republic may be factored on a recourse or non-recourse basis. The facility has a factoring fee of 0.3% of any factored receivable and bears interest at one-month PRIBOR plus 2.5% per annum for the period that receivables are factored and outstanding.

⁽³⁾

As at March 31, 2016 there were RON 25.1 million (approximately US$ 6.4 million) of receivables factored under a RON 75.0 million (approximately US$ 19.1 million) factoring framework agreement with Global Funds IFN S.A. entered into in the first quarter of 2016. Under this facility, receivables from certain customers in Romania may be factored on a non-recourse basis. The facility has a factoring fee of 4.0% of any factored receivable and bears interest at 6.0% per annum for the period that receivables are factored and outstanding.

As at March 31, 2016 there were no receivables factored under a RON 20.0 million (approximately US$ 5.1 million) factoring framework agreement with UniCredit Bank S.A. Under this facility, receivables from certain customers in Romania may be factored on a non-recourse basis. The facility has a factoring fee of 0.3% of any factored receivable and bears interest at 2.3% per annum for the period that receivables are factored and outstanding.

Total Group

At March 31, 2016, the maturity of our senior debt and credit facilities, excluding any future elections to pay interest in kind, was as follows:



2016	$	—
2017 ⁽¹⁾	826,234
2018	—
2019	267,930
2020	—
2021 and thereafter	—
Total senior debt and credit facilities	1,094,164
Debt issuance costs	(12,807		)
Less: net discount	(138,147		)
Carrying amount of senior debt and credit facilities	$	943,210

⁽¹⁾

On April 7, 2016, we drew the 2021 Euro Term Loan, the proceeds of which, together with cash on hand, were applied toward the repayment of the 2017 Term Loan and the redemption and discharge of the 2017 PIK Notes. Also on April 7, 2016, we extended the maturity date of the 2018 Euro Term Loan to November 1, 2018 and extended the maturity date of the 2021 Revolving Credit Facility at the current borrowing capacity until January 1, 2018 and with a borrowing capacity US$ 50.0 million from January 1, 2018 to the maturity date on February 19, 2021. See Note 21, "Subsequent Events".

Capital Lease Commitments

We lease certain of our office and broadcast facilities as well as machinery and equipment under various leasing arrangements. The future minimum lease payments, by year and in the aggregate, under capital leases with initial or remaining non-cancellable lease terms in excess of one year, consisted of the following at March 31, 2016:



2016	$	973
2017	1,216
2018	947
2019	589
2020	86
2021 and thereafter	—
Total undiscounted payments	3,811
Less: amount representing interest	(134		)
Present value of net minimum lease payments	$	3,677