LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS

Summary



	December 31, 2017			December 31, 2016
Long-term debt	$	1,079,187		$	999,209
Other credit facilities and capital leases	9,487			3,427
Total long-term debt and other financing arrangements	1,088,674			1,002,636
Less: current maturities	(2,960		)	(1,228		)
Total non-current long-term debt and other financing arrangements	$	1,085,714		$	1,001,408

Financing Transactions

Pursuant to an amendment in March 2017 to the Reimbursement Agreement (as defined below) with Time Warner Inc. ("Time Warner"), as guarantor of our obligations under the Euro Term Loans (as defined below), the grid pricing structure on the all-in rate that applied only to the 2021 Euro Term Loan (as defined below) was extended to the 2018 Euro Term Loan (as defined below) and the 2019 Euro Term Loan (as defined below), with a reduction in the pricing under the grid for each of the Euro Term Loans resulting in an all-in rate ranging from 8.5% (if our net leverage, as defined in the Reimbursement Agreement, is greater than or equal to seven times) to 5.0% (if our net leverage is less than five times). In addition, we can achieve a further 50 basis point reduction in the all-in rate if we reduce our long-term debt to less than EUR 815.0 million, subject to certain adjustments in respect of specified debt repayments, on or prior to September 30, 2018. As at December 31, 2017, our net leverage ratio was 5.4 times and the all-in interest rate was 6.0% (effective from the end of October 2017). We are required to pay the first 5.0% of the all-in rate (including the base rate and the rate paid pursuant to customary hedging arrangements) on the Euro Term Loans in cash and the remainder may be paid in cash or in kind, at our option. For details, see the table below under the heading "Reimbursement Agreement and Guarantee Fees".

On August 1, 2017, we elected to repay EUR 50.0 million (approximately US$ 59.1 million at August 1, 2017 rates) of the outstanding principal balance of the 2018 Euro Term Loan on which we recognized a loss on extinguishment of US$ 0.1 million.

On February 5, 2018, we entered into an amendment to extend the maturity date of the 2018 Euro Term Loan from November 1, 2018 to May 1, 2019. On February 6, 2018, we paid EUR 50.0 million (approximately US$ 61.6 million at February 6, 2018 rates) of the outstanding principal balance of the 2018 Euro Term Loan (see Note 24, "Subsequent Events").

We are required to apply the proceeds from the sale of our Croatia and Slovenia operations to the repayment of the remaining principal amounts owing in respect of the 2018 Euro Term Loan. Any excess amounts will then be applied to pay fees related to the 2019 Euro Term Loan, including Guarantee Fees and the Commitment Fee which we have previously paid in kind pursuant to the Reimbursement Agreement (see Note 3, "Discontinued Operations and Assets Held for Sale").

Overview

Total long-term debt and credit facilities comprised the following at December 31, 2017:



	Principal Amount of Liability Component		Debt Issuance Costs ⁽¹⁾			Net Carrying Amount
2018 Euro Term Loan	$	240,819	$	(274	)	$	240,545
2019 Euro Term Loan	282,238		(367		)	281,871
2021 Euro Term Loan	562,232		(5,461		)	556,771
2021 Revolving Credit Facility	—		—			—
Total long-term debt and credit facilities	$	1,085,289	$	(6,102	)	$	1,079,187

⁽¹⁾

Debt issuance costs related to the 2018 Euro Term Loan, 2019 Euro Term Loan and 2021 Euro Term Loan are being amortized on a straight-line basis, which approximates the effective interest method, over the life of the respective instruments. Debt issuance costs related to the 2021 Revolving Credit Facility are classified as non-current assets in our consolidated balance sheet and are being amortized on a straight-line basis over the life of the 2021 Revolving Credit Facility.

Long-term Debt

Our long-term debt comprised the following at December 31, 2017 and December 31, 2016:



	Carrying Amount				Fair Value
	December 31, 2017		December 31, 2016		December 31, 2017		December 31, 2016
2018 Euro Term Loan	$	240,545	$	263,734	$	236,337	$	233,297
2019 Euro Term Loan	281,871		247,594		268,858		203,314
2021 Euro Term Loan	556,771		487,881		510,882		369,738
	$	1,079,187	$	999,209	$	1,016,077	$	806,349

The fair values of the Euro Term Loans (as defined below) as at December 31, 2017 and December 31, 2016 were determined based on comparable instruments that trade in active markets. This measurement of estimated fair value uses Level 2 inputs as described in Note 14, "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 Euro Term Loans. The embedded derivatives are considered clearly and closely related to their respective Euro Term Loan, and as such are not required to be accounted for separately.

2018 Euro Term Loan

As at December 31, 2017, the principal amount of our floating rate senior unsecured term credit facility (as amended, the "2018 Euro Term Loan") outstanding was EUR 200.8 million (approximately US$ 240.8 million). The 2018 Euro Term Loan bears interest at three-month EURIBOR (fixed pursuant to customary hedging arrangements (see Note 14, "Financial Instruments and Fair Value Measurements")) plus a margin of between 1.1% and 1.9% depending on the credit rating of Time Warner Inc. ("Time Warner"). As at December 31, 2017, the all-in borrowing rate on amounts outstanding under the 2018 Euro Term Loan was 6.0% (the components of which are shown in the table below under the heading "Interest Rate Summary").

Interest on the 2018 Euro Term Loan is payable quarterly in arrears on each March 12, June 12, September 12 and December 12. Pursuant to an amendment entered into on February 5, 2018, the maturity date of the 2018 Euro Term Loan was extended to May 1, 2019. See Note 24, "Subsequent Events". The 2018 Euro Term Loan may currently be prepaid at our option, in whole or in part, without premium or penalty. The 2018 Euro Term Loan is a senior unsecured obligation of CME Ltd., and is unconditionally guaranteed by our 100% owned subsidiary CME Media Enterprises B.V. ("CME BV") and by Time Warner and certain of its subsidiaries.

2019 Euro Term Loan

As at December 31, 2017, 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$ 282.2 million). The 2019 Euro Term Loan bears interest at three-month EURIBOR (fixed pursuant to customary hedging arrangements (see Note 14, "Financial Instruments and Fair Value Measurements")) plus a margin of between 1.1% and 1.9% depending on the credit rating of Time Warner. As at December 31, 2017, the all-in borrowing rate on amounts outstanding under the 2019 Euro Term Loan was 6.0% (the components of which are shown in the table below under the heading "Interest Rate Summary").

Interest on the 2019 Euro Term Loan is payable quarterly in arrears on each February 13, May 13, August 13 and November 13. The 2019 Euro Term Loan matures on November 1, 2019 and may currently be prepaid at our option, in whole or in part, 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.

2021 Euro Term Loan

As at December 31, 2017, the principal amount of our floating rate senior unsecured term credit facility (the "2021 Euro Term Loan") outstanding was EUR 468.8 million (approximately US$ 562.2 million). The 2021 Euro Term Loan bears interest at three-month EURIBOR (fixed pursuant to customary hedging arrangements (see Note 14, "Financial Instruments and Fair Value Measurements")) plus a margin of between 1.1% and 1.9% depending on the credit rating of Time Warner. As at December 31, 2017, the all-in borrowing rate on amounts outstanding under the 2021 Euro Term Loan was 6.0% (the components of which are shown in the table below under the heading "Interest Rate Summary").

Interest on the 2021 Euro Term Loan is payable quarterly in arrears on each April 7, July 7, October 7 and January 7. 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 the 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.

Reimbursement Agreement and Guarantee Fees

In connection with Time Warner’s guarantees of the 2018 Euro Term Loan, the 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. The Reimbursement Agreement provides for the payment of guarantee fees (collectively, the "Guarantee Fees") to Time Warner as consideration for those guarantees, and the reimbursement to Time Warner of any amounts paid by them under any guarantee or through any loan purchase right exercised by it. 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 both our 100% owned subsidiary Central European Media Enterprises N.V. ("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 (described below).

We pay Guarantee Fees to Time Warner based on the amounts outstanding on the Euro Term Loans calculated on a per annum basis and on our consolidated net leverage (as defined in the Reimbursement Agreement) as shown in the table below:



Consolidated Net Leverage				Cash Rate⁽¹⁾		PIK Fee Rate		Total Rate ⁽²⁾
≥	7.0x			5.00	%	3.50	%	8.50	%
<	7.0x	-	6.0x	5.00	%	2.25	%	7.25	%
<	6.0x	-	5.0x	5.00	%	1.00	%	6.00	%
<	5.0x			5.00	%	—	%	5.00	%


⁽¹⁾	Includes cash paid for interest for the Euro Term Loans and the related customary hedging arrangements.


⁽²⁾	If we reduce our long-term debt to less than EUR 815.0 million, subject to certain adjustments in respect of specified debt repayments, prior to September 30, 2018, a 50 basis point reduction in the all-in rate would be applied.

Our consolidated net leverage as at December 31, 2017 and December 31, 2016 was 5.4x and 6.9x, respectively. For the years ended December 31, 2017, 2016 and 2015, we recognized US$ 46.0 million, US$ 52.7 million and US$ 6.1 million, respectively, of Guarantee Fees as interest expense in our 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. The Guarantee Fees relating to the 2021 Euro Term Loan are payable semi-annually in arrears on each June 1 and December 1. The first 5.0% of the all-in rate for each facility (including the base rate and the rate paid pursuant to the hedging arrangements) must be paid in cash and the remainder is payable at our election in cash or in kind.

The Guarantee Fees paid in kind are presented as a component of other non-current liabilities (see Note 11, "Other Liabilities") and bear interest per annum at their respective Guarantee Fee rate (as set forth in the table below). Guarantee Fees paid in cash are included in cash flows from operating activities in our consolidated statements of cash flows.

Interest Rate Summary



	Base Rate			Rate Fixed Pursuant to Interest Rate Hedges		Guarantee Fee Rate		All-in Borrowing Rate
2018 Euro Term Loan	1.50	%		0.14	%	4.36	%	6.00	%
2019 Euro Term Loan	1.50	%		0.31	%	4.19	%	6.00	%
2021 Euro Term Loan	1.50	%		0.28	%	4.22	%	6.00	%
2021 Revolving Credit Facility ⁽¹⁾	8.69	%	⁽²⁾	—		—		8.69	%


⁽¹⁾	As at December 31, 2017, the 2021 Revolving Credit Facility was undrawn.


⁽²⁾	Based on the three month LIBOR of 1.69% as at December 31, 2017.

2021 Revolving Credit Facility

We had no balance outstanding under the US$ 115.0 million revolving credit facility (the “2021 Revolving Credit Facility”) as at December 31, 2017. The available amount decreased to US$ 50.0 million from January 1, 2018.

The 2021 Revolving Credit Facility bears interest at a rate per annum based on, at our option, an alternate base rate plus 6.0% or an amount equal to the greater of (i) an adjusted LIBO rate and (ii) 1.0%, plus, in each case, 7.0%, with the first 5.0% paid in cash and the remainder payable at our election in cash or in kind by adding such accrued interest to the applicable principal amount outstanding under the 2021 Revolving Credit Facility. 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 LIBOR (subject to a floor of 1.0%) plus 9.0% if our net leverage is greater than or equal to seven times, to LIBOR (subject to a floor of 1.0%) plus 6.0% 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. 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 December 31, 2017 and December 31, 2016:



	December 31, 2017			December 31, 2016
Credit facilities ^{(1) – (3)}	$	—		$	—
Capital leases	9,487			3,427
Total credit facilities and capital leases	9,487			3,427
Less: current maturities	(2,960		)	(1,228		)
Total non-current credit facilities and capital leases	$	6,527		$	2,199


⁽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 throughout 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 December 31, 2017, we had deposits of US$ 12.4 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, 2016, we had deposits of US$ 16.4 million in and no drawings on the BMG cash pool.

⁽²⁾

As at December 31, 2017, there were CZK 127.2 million (approximately US$ 6.0 million) of receivables factored on a non-recourse basis under a CZK 575.0 million (approximately US$ 27.0 million) factoring framework agreement with Factoring Ceska Sporitelna (“FCS”) that were derecognized from the consolidated balance sheet. Under this facility, up to CZK 575.0 million (approximately US$ 27.0 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 0.19% of any factored receivable and bears interest at one-month PRIBOR plus 0.95% per annum for the period that receivables are factored and outstanding.

⁽³⁾

As at December 31, 2017 there were RON 99.8 million (approximately US$ 25.6 million) of receivables factored under a factoring framework agreement with Global Funds IFN S.A that were derecognized from the consolidated balance sheet. 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 from the date the receivables are factored to the due date of the factored receivable.

Total Group

At December 31, 2017, the maturity of our long-term and credit facilities was as follows:



2018 ⁽¹⁾	$	240,819
2019	282,238
2020	—
2021	562,232
2022	—
2023 and thereafter	—
Total long-debt and credit facilities	1,085,289
Debt issuance costs	(6,102		)
Carrying amount of long-debt and credit facilities	$	1,079,187


⁽¹⁾	On February 5, 2018, we entered into an amendment to extend the maturity date of the 2018 Euro Term Loan from November 1, 2018 to May 1, 2019. On February 6, 2018, we paid EUR 50.0 million (approximately US$ 61.6 million as at February 6, 2018 rates) of the outstanding principal balance of the 2018 Euro Term Loan (see Note 24, "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 December 31, 2017:



2018	$	3,238
2019	2,828
2020	2,516
2021	1,294
2022	2
2023 and thereafter	—
Total undiscounted payments	9,878
Less: amount representing interest	(391		)
Present value of net minimum lease payments	$	9,487