5. LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS

Summary



	June 30, 2018			December 31, 2017
Long-term debt	$	862,287		$	1,079,187
Other credit facilities and capital leases	10,385			9,487
Total long-term debt and other financing arrangements	872,672			1,088,674
Less: current maturities	(51,015		)	(2,960		)
Total non-current long-term debt and other financing arrangements	$	821,657		$	1,085,714

Financing Transactions

On February 5, 2018, we entered into an amendment to extend the maturity date of the 2019 Euro Loan (formerly 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 2019 Euro Loan.

On April 25, 2018, we entered into a series of amendments (effective on April 26, 2018) which modify certain terms of our 2021 Euro Loan (formerly the 2019 Euro Term Loan), the 2023 Euro Loan (formerly the 2021 Euro Term Loan), the 2023 Revolving Credit Facility (formerly the 2021 Revolving Credit Facility) (each as defined below) and the Reimbursement Agreement (as defined below) (collectively, the "Financing Transactions"). The Financing Transactions reduce the rates payable under the pricing grid under the Reimbursement Agreement and the 2023 Revolving Credit Facility as well as extend the maturity dates of the 2021 Euro Loan, the 2023 Euro Loan and the 2023 Revolving Credit Facility. The amount available to us under the 2023 Revolving Credit Facility increased to US$ 75.0 million from April 26, 2018.

On May 3, 2018, we paid EUR 110.0 million (approximately US$ 132.0 million at May 3, 2018 rates) of the outstanding principal balance of the 2019 Euro Loan.

We are required to apply the proceeds from the Croatian Transaction and Slovenian Transaction (see Note 3, "Discontinued Operations and Assets Held for Sale") to the repayment of the remaining principal amount of the 2019 Euro Loan. Any excess amounts will then be applied to pay fees related to the 2021 Euro Loan, including Guarantee Fees and the Commitment Fee which we have previously paid in kind. To the extent excess funds are available thereafter, the remaining proceeds are required to be applied to the principal amounts owing in respect of the 2021 Euro Loan.

Overview

Total long-term debt and credit facilities comprised the following at June 30, 2018:



	Principal Amount of Liability Component		Debt Issuance Costs ⁽¹⁾			Net Carrying Amount
2019 Euro Loan	$	47,565	$	(55	)	$	47,510
2021 Euro Loan	274,354		(721		)	273,633
2023 Euro Loan	546,527		(5,383		)	541,144
2023 Revolving Credit Facility	—		—			—
Total long-term debt and credit facilities	$	868,446	$	(6,159	)	$	862,287

⁽¹⁾

Debt issuance costs related to the 2019 Euro Loan, 2021 Euro Loan and 2023 Euro 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 2023 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 2023 Revolving Credit Facility.

Long-term Debt

Our long-term debt comprised the following at June 30, 2018 and December 31, 2017:



	Carrying Amount				Fair Value
	June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017
2019 Euro Loan	$	47,510	$	240,545	$	47,103	$	236,337
2021 Euro Loan	273,633		281,871		256,999		268,858
2023 Euro Loan	541,144		556,771		487,110		510,882
	$	862,287	$	1,079,187	$	791,212	$	1,016,077

The fair values of the Euro Loans (as defined below) as at June 30, 2018 and December 31, 2017 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 12, "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 each of the Euro Loans. The embedded derivatives are considered clearly and closely related to their respective Euro Loan, and as such are not required to be accounted for separately.

2019 Euro Loan (formerly the 2018 Euro Term Loan)

As at June 30, 2018, the principal amount of our floating rate senior unsecured term credit facility (the "2019 Euro Loan") outstanding was EUR 40.8 million (approximately US$ 47.6 million). The 2019 Euro Loan bears interest at three-month EURIBOR (fixed pursuant to customary hedging arrangements (see Note 12, "Financial Instruments and Fair Value Measurements")) plus a margin of between 1.1% and 1.9% depending on the credit rating of Warner Media, LLC ("Warner Media", formerly Time Warner, Inc.), a wholly owned subsidiary of AT&T, Inc. ("AT&T") as of June 14, 2018. As at June 30, 2018, the all-in borrowing rate on amounts outstanding under the 2019 Euro Loan was 3.75%, the components of which are shown in the table below under the heading "Interest Rate Summary".

Interest on the 2019 Euro Loan is payable quarterly in arrears on each March 12, June 12, September 12 and December 12. The 2019 Euro Loan will mature on May 1, 2019 and may be prepaid at our option, in whole or in part, without premium or penalty. The 2019 Euro 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 Warner Media and certain of its subsidiaries.

2021 Euro Loan (formerly the 2019 Euro Term Loan)

As at June 30, 2018, the principal amount of our floating rate senior unsecured term credit facility (the "2021 Euro Loan") outstanding was EUR 235.3 million (approximately US$ 274.4 million). The 2021 Euro Loan bears interest at three-month EURIBOR (fixed pursuant to customary hedging arrangements (see Note 12, "Financial Instruments and Fair Value Measurements")) plus a margin of between 1.1% and 1.9% depending on the credit rating of Warner Media. As at June 30, 2018, the all-in borrowing rate on amounts outstanding under the 2021 Euro Loan was 3.75%, the components of which are shown in the table below under the heading "Interest Rate Summary".

Interest on the 2021 Euro Loan is payable quarterly in arrears on each February 13, May 13, August 13 and November 13. The 2021 Euro Loan matures on November 1, 2021 and may currently be prepaid at our option, in whole or in part, without premium or penalty from cash generated from our operations. From April 26, 2020, the 2021 Euro Loan may be refinanced at our option. The 2021 Euro Loan is a senior unsecured obligation of CME Ltd. and is unconditionally guaranteed by CME BV and by Warner Media and certain of its subsidiaries.

2023 Euro Loan (formerly the 2021 Euro Term Loan)

As at June 30, 2018, the principal amount of our floating rate senior unsecured term credit facility (the "2023 Euro Loan") outstanding was EUR 468.8 million (approximately US$ 546.5 million). The 2023 Euro Loan bears interest at three-month EURIBOR (fixed pursuant to customary hedging arrangements (see Note 12, "Financial Instruments and Fair Value Measurements")) plus a margin of between 1.1% and 1.9% depending on the credit rating of Warner Media. As at June 30, 2018, the all-in borrowing rate on amounts outstanding under the 2023 Euro Loan was 4.25%, the components of which are shown in the table below under the heading "Interest Rate Summary".

Interest on the 2023 Euro Loan is payable quarterly in arrears on each January 7, April 7, July 7 and October 7. The 2023 Euro Loan matures on April 26, 2023 and may be prepaid at our option, in whole or in part, without premium or penalty from cash generated from our operations. From April 26, 2020, the 2023 Euro Loan may be refinanced at our option. The 2023 Euro Loan is a senior unsecured obligation of CME BV and is unconditionally guaranteed by CME Ltd. and by Warner Media and certain of its subsidiaries.

Reimbursement Agreement and Guarantee Fees

In connection with Warner Media’s guarantees of the 2019 Euro Loan, the 2021 Euro Loan and 2023 Euro Loan (collectively, the "Euro Loans"), we entered into a reimbursement agreement (as amended, the “Reimbursement Agreement") with Warner Media. The Reimbursement Agreement provides for the payment of guarantee fees (collectively, the "Guarantee Fees") to Warner Media as consideration for those guarantees, and the reimbursement to Warner Media of any amounts paid by them under any guarantee or through any loan purchase right exercised by it. The loan purchase right allows Warner Media to purchase any amount outstanding under the Euro Loans from the lenders following an event of default under the Euro 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 2023 Revolving Credit Facility (described below).

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

All-in Rate



Consolidated Net Leverage				2019 Euro Loan		2021 Euro Loan		2023 Euro Loan
≥	7.0x			6.00	%	6.00	%	6.50	%
<	7.0x	-	6.0x	5.00	%	5.00	%	5.50	%
<	6.0x	-	5.0x	4.25	%	4.25	%	4.75	%
<	5.0x	-	4.0x	3.75	%	3.75	%	4.25	%
<	4.0x	-	3.0x	3.25	%	3.25	%	3.75	%
<	3.0x			3.25	%	3.25	%	3.50	%

The all-in rate remains subject to a further reduction of up to 50 basis points if CME’s total debt is reduced below EUR 815.0 million on or prior to September 30, 2018, subject to certain adjustments in respect of specified debt repayments, such that the all-in rate cannot be less than 3.0%. Pursuant to the Financing Transactions, the Guarantee Fees must be paid in cash.

Our consolidated net leverage as at June 30, 2018 and December 31, 2017 was 4.4x and 5.4x, respectively. For the three and six months ended June 30, 2018 and 2017, we recognized US$ 5.3 million and US$ 14.0 million; and US$ 11.5 million and US$ 24.5 million, respectively, of Guarantee Fees as interest expense in our condensed consolidated statements of operations and comprehensive income / loss.

The Guarantee Fees relating to the 2019 Euro Loan and the 2021 Euro Loan are payable semi-annually in arrears on each May 1 and November 1. The Guarantee Fees relating to the 2023 Euro Loan are payable semi-annually in arrears on each June 1 and December 1.

The Guarantee Fees previously 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 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
2019 Euro Loan	1.28	%		0.14	%		2.33	%	3.75	%
2021 Euro Loan	1.28	%		0.31	%	⁽¹⁾	2.16	%	3.75	%
2023 Euro Loan	1.28	%		0.28	%	⁽²⁾	2.69	%	4.25	%
2023 Revolving Credit Facility ⁽³⁾	6.34	%	⁽⁴⁾	—	%		—	%	6.34	%


⁽¹⁾	Effective until November 1, 2019. From November 1, 2019 through maturity on November 1, 2021, the rate fixed pursuant to interest rate hedges will increase to 0.47%, with a corresponding decrease in the Guarantee Fee rate, such that the all-in borrowing rate remains 3.75% if our net leverage ratio remains unchanged.


⁽²⁾	Effective until February 19, 2021. From February 19, 2021 through maturity on April 26, 2023, the rate fixed pursuant to interest rate hedges will increase to 0.97%, with a corresponding decrease in the Guarantee Fee rate, such that the all-in borrowing rate remains 4.25% if our net leverage ratio remains unchanged.


⁽³⁾	As at June 30, 2018, the 2023 Revolving Credit Facility was undrawn.


⁽⁴⁾	Based on the three month LIBOR of 2.34% as at June 30, 2018.

2023 Revolving Credit Facility (formerly the 2021 Revolving Credit Facility)

We had no balance outstanding under the US$ 75.0 million revolving credit facility (the "2023 Revolving Credit Facility") as at June 30, 2018.

The 2023 Revolving Credit Facility bears interest at a rate per annum based on, at our option, an alternate base rate ("ABR Loans" as defined in the 2023 Revolving Credit Facility Agreement) plus the spread applicable to ABR Loans based on our consolidated net leverage or an amount equal to the greater of (i) an adjusted LIBO rate and (ii) 1.0%, plus the spread applicable to the Eurodollar Loans (as defined in the 2023 Revolving Credit Facility Agreement) based on our consolidated net leverage ratio (as defined in the Reimbursement Agreement), with all amounts payable in cash. The maturity date of the 2023 Revolving Credit Facility is April 26, 2023. When drawn, the 2023 Revolving Credit Facility permits prepayment at our option in whole or in part without penalty.

Pursuant to the Financing Transactions, the following spreads are applicable:



Consolidated Net Leverage				Alternate Base Rate Loans		Eurodollar Loans
≥	7.0x			5.25	%	6.25	%
<	7.0x	-	6.0x	4.25	%	5.25	%
<	6.0x	-	5.0x	3.50	%	4.50	%
<	5.0x	-	4.0x	3.00	%	4.00	%
<	4.0x	-	3.0x	2.50	%	3.50	%
<	3.0x			2.25	%	3.25	%

The 2023 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 2023 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 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 June 30, 2018 and December 31, 2017:



	June 30, 2018			December 31, 2017
Credit facilities ^{(1) – (3)}	$	—		$	—
Capital leases	10,385			9,487
Total credit facilities and capital leases	10,385			9,487
Less: current maturities	(3,505		)	(2,960		)
Total non-current credit facilities and capital leases	$	6,880		$	6,527


⁽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 June 30, 2018, we had deposits of US$ 17.5 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, 2017, we had deposits of US$ 12.4 million in and no drawings on the BMG cash pool.

⁽²⁾

Under a factoring framework agreement with Factoring Česka spořitelna a.s., up to CZK 575.0 million (approximately US$ 25.8 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⁾	Under a factoring framework agreement with Global Funds IFN S.A., 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 June 30, 2018, the maturity of our long-term debt and credit facilities was as follows:



2018	$	—
2019	47,565
2020	—
2021	274,354
2022	—
2023 and thereafter	546,527
Total long-term debt and credit facilities	868,446
Debt issuance costs	(6,159		)
Carrying amount of long-term debt and credit facilities	$	862,287

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 June 30, 2018:



2018	$	1,912
2019	3,466
2020	3,152
2021	1,969
2022	259
2023 and thereafter	—
Total undiscounted payments	10,758
Less: amount representing interest	(373		)
Present value of net minimum lease payments	$	10,385