7. LONG-TERM
DEBT
Long-term debt
as of December 31, 2013 and 2012 is summarized as follows (in
millions):
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2013 |
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2012 |
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Notes, net of discount of
$0 million and $3.0 million
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$ |
— |
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$ |
320.9 |
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Term Loan
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$ |
364.1 |
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$ |
20.0 |
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364.1 |
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340.9 |
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Less current
maturities
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3.8 |
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0.2 |
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$ |
360.3 |
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$ |
340.7 |
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The scheduled
maturities of long-term debt as of December 31, 2013 are as
follows (in millions):
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Year
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Amount |
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2014
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$ |
3.8 |
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2015
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3.8 |
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2016
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|
3.8 |
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2017
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3.8 |
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2018
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3.8 |
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Thereafter
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345.1 |
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$ |
364.1 |
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For the years
ended December 31, 2013 and 2012, the Company recognized an
increase of $0.3 million and $0.6 million in interest expense,
respectively, related to amortization of the bond
discount.
Notes
The following
discussion pertains to the Company’s 8.75% senior secured
first lien notes due 2017, (the “Notes”), and the
indenture governing the Notes, (the “Indenture”), as
the same existed during the year ended December 31, 2013. This
discussion is qualified in its entirety by reference to the full
text of the Notes and the Indenture. On August 2, 2013, the
Company redeemed the then outstanding Notes and the Indenture was
terminated.
On
July 27, 2010, the Company completed the offering and sale of
$400 million aggregate principal amount of its 8.75% Senior Secured
First Lien Notes (the “Notes”). The Notes were issued
at a discount of 98.722% of their principal amount with a maturity
date of August 1, 2017. Interest on the Notes accrued at a
rate of 8.75% per annum from the date of original issuance and
was payable semi-annually in arrears on February 1 and
August 1 of each year, commencing on February 1, 2011.
The Company received net proceeds of approximately $388 million
from the sale of the Notes (net of bond discount of $5 million and
fees of $7 million), which were used to pay all indebtedness
outstanding under the previous syndicated bank credit facility,
terminate the related interest rate swap agreements, pay fees and
expenses related to the offering of the Notes and for general
corporate purposes.
During the
fourth quarter of 2011, the Company repurchased Notes on the open
market with a principal amount of $16.2 million. The Company
recorded a loss on debt extinguishment of $0.4 million primarily
due to the write off of unamortized finance costs and unamortized
bond discount.
During the
second quarter of 2012, the Company repurchased Notes with a
principal amount of $20.0 million pursuant to the optional
redemption provisions in the Indenture. The redemption price for
the redeemed Notes was 103% of the principal amount plus all
accrued and unpaid interest. The Company recorded a loss on debt
extinguishment of $1.2 million related to the premium paid and the
write off of unamortized finance costs and unamortized bond
discount.
During the
fourth quarter of 2012, the Company repurchased Notes with a
principal amount of $40.0 million pursuant to the optional
redemption provisions in the Indenture. The redemption price for
the redeemed Notes was 103% of the principal amount plus all
accrued and unpaid interest. The Company recorded a loss on debt
extinguishment of $2.5 million related to the premium paid and the
write off of unamortized finance costs and unamortized bond
discount.
The Notes were
guaranteed on a senior secured basis by all of the existing and
future wholly-owned domestic subsidiaries (the “Note
Guarantors”). The Notes and the guarantees ranked equal in
right of payment to all of the Company’s and the Note
Guarantors’ existing and future senior indebtedness and
senior in right of payment to all of the Company’s and the
Note Guarantors’ existing and future subordinated
indebtedness. In addition, the Notes and the guarantees were
effectively junior: (i) to the Company’s and the Note
Guarantors’ indebtedness secured by assets that are not
collateral; (ii) pursuant to a Collateral Trust and
Intercreditor Agreement dated July 27, 2010 the Company
entered into with Wells Fargo Bank, National Association, as the
Trustee under the Indenture, and GE Capital, as the Collateral
Trustee and as the administrative agent under the 2013 Credit
Facility (the “Intercreditor Agreement”) at the same
time that the Company entered into a previous credit facility that
the Company entered into in July 2010; and (iii) to all of the
liabilities of any of the Company’s existing and future
subsidiaries that do not guarantee the Notes, to the extent of the
assets of those subsidiaries. The Notes were secured by
substantially all of the assets, as well as the pledge of the stock
of substantially all of the subsidiaries, including the special
purpose subsidiary formed to hold the Company’s FCC
licenses.
The Company had
the right to redeem:
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prior to August 1, 2013, on one or more occasions, up to
10% of the original principal amount of the Notes during each
12-month period beginning on August 1, 2010, at a redemption
price equal to 103% of the principal amount of the Notes, plus
accrued and unpaid interest;
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prior to August 1, 2013, on one or more occasions, up to
35% of the original principal amount of the Notes with the net
proceeds from certain equity offerings, at a redemption price of
108.750% of the principal amount of the Notes, plus accrued and
unpaid interest; provided that: (i) at least 65% of the
aggregate principal amount of all Notes issued under the Indenture
remains outstanding immediately after such redemption; and
(ii) such redemption occurs within 60 days of the date of
closing of any such equity offering;
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prior to August 1, 2013, some or all of the Notes, at a
redemption price equal to 100% of the principal amount of the Notes
plus a “make-whole” premium plus accrued and unpaid
interest; and
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on or after August 1, 2013, some or all of the Notes, at a
redemption price of: (i) 106.563% of the principal amount of
the Notes if redeemed during the twelve-month period beginning on
August 1, 2013; (ii) 104.375% of the principal amount of
the Notes if redeemed during the twelve-month period beginning on
August 1, 2014; (iii) 102.188% of the principal amount of
the Notes if redeemed during the twelve-month period beginning on
August 1, 2015; and (iv) 100% of the principal amount of
the Notes if redeemed on or after August 1, 2016, in each case
plus accrued and unpaid interest.
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In addition,
upon a change of control of the Company, as defined in the
Indenture, the Company would have been required to make an offer to
repurchase all Notes then outstanding, at a purchase price equal to
101% of the aggregate principal amount of the Notes repurchased,
plus accrued and unpaid interest. In addition, the Company had the
right at any time and from time to time purchase Notes in the open
market or otherwise.
Upon an event
of default, as defined in the Indenture, the Notes would have
become due and payable: (i) immediately without further notice
if such event of default arises from events of bankruptcy or
insolvency of the Company, any Note Guarantor or any restricted
subsidiary; or (ii) upon a declaration of acceleration of the
Notes in writing to the Company by the Trustee or holders
representing 25% of the aggregate principal amount of the Notes
then outstanding, if an event of default occurs and is continuing.
The Indenture contained additional provisions that are customary
for an agreement of this type, including indemnification by the
Company and the Note Guarantors. In addition, the Indenture
contained various provisions that limited the Company’s
ability to: (i) apply the proceeds from certain asset sales
other than in accordance with the terms of the Indenture; and
(ii) restrict dividends or other payments from
subsidiaries.
The carrying
amount and estimated fair value of the Notes as of
December 31, 2012 was $320.9 million and $351.3 million,
respectively. The estimated fair value is based on quoted market
prices for the Notes.
As discussed in
more detail below, on August 2, 2013, the Company redeemed the
then outstanding Notes and the Indenture was terminated.
2012
Credit Facility
The following
discussion pertains to a term loan and revolving credit facility of
up to $50 million that the Company entered into on
December 20, 2012 (the “2012 Credit Facility”),
pursuant to an amended and restated agreement dated as of
December 20, 2012 (the “2012 Credit Agreement”).
The 2012 Credit Facility was terminated on May 31, 2013 when
the Company entered into its current term loan and revolving credit
facility of up to $405.0 million (the “2013 Credit
Facility”). Accordingly, the following discussion summarizes
only certain provisions of the 2012 Credit Facility and the 2012
Credit Agreement. This discussion is qualified in its entirety by
reference to the full text of the 2012 Credit Agreement.
On
December 20, 2012, the Company entered into the 2012 Agreement
pursuant to the 2012 Credit Facility. The 2012 Credit Facility had
an expiration date of December 20, 2016 and consisted of a
four-year $20 million term loan facility and a four-year $30
million revolving credit facility, which included a $3 million
sub-facility for letters of credit.
Borrowings
under the 2012 Credit Facility bore interest at either:
(i) the Base Rate (as defined in the 2012 Credit Agreement)
plus the Applicable Margin (as defined in the 2012 Credit
Agreement); or (ii) LIBOR plus the Applicable Margin (as
defined in the 2012 Credit Agreement).
The 2012 Credit
Facility was guaranteed on a senior secured basis by all of the
Company’s existing and future wholly-owned domestic
subsidiaries (the “Credit Guarantors”), which were also
the Note Guarantors (collectively, the “Guarantors”).
The 2012 Credit Facility was secured on a first priority basis by
the Company’s and the Credit Guarantors’ assets, which
also secured the Notes. The Company’s borrowings, if any,
under the 2012 Credit Facility ranked senior to the Notes upon the
terms set forth in an Intercreditor Agreement that the Company
entered into in connection with the credit facility that was in
effect at that time.
The 2012 Credit
Agreement also contained additional provisions that are customary
for an agreement of this type, including indemnification by the
Company and the Credit Guarantors.
In connection
with the Company entering into the Indenture and the 2012 Credit
Agreement, the Company and the Guarantors also entered into the
following agreements:
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a Security Agreement, pursuant to which the Company and the
Guarantors each granted a first priority security interest in the
collateral securing the Notes and the 2012 Credit Facility for the
benefit of the holders of the Notes and the lender under the 2012
Credit Facility; and
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an Intercreditor Agreement, in order to define the relative
rights of the holders of the Notes and the lender under the 2012
Credit Facility with respect to the collateral securing the
Company’s and the Guarantors’ respective obligations
under the Notes and the 2012 Credit Facility; and
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a Registration Rights Agreement, pursuant to which the Company
registered the Notes and successfully conducted an exchange
offering for the Notes in unregistered form, as originally
issued.
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Subject to
certain exceptions, either the 2012 Credit Agreement, the
Indenture, or both contained various provisions that limited the
Company’s ability, among other things, to engage in certain
transactions, make acquisitions and dispose of certain assets, as
more fully provided therein.
2013
Credit Facility
On May 31,
2013, the Company entered into the 2013 Credit Facility pursuant to
the 2013 Credit Agreement. The 2013 Credit Facility consists of a
$20.0 million senior secured Term Loan A Facility (the
“Term Loan A Facility”), a $375.0 million senior
secured Term Loan B Facility (the “Term Loan B
Facility”; and together with the Term Loan A Facility,
the “Term Loan Facilities”) which was drawn on
August 1, 2013 (the “Term Loan B Borrowing
Date”), and a $30.0 million senior secured Revolving Credit
Facility (the “Revolving Credit Facility”). In
addition, the 2013 Credit Facility provides that the Company may
increase the aggregate principal amount of the 2013 Credit Facility
by up to an additional $100.0 million, subject to the Company
satisfying certain conditions.
Borrowings
under the Term Loan A Facility were used on the closing date of the
2013 Credit Facility (the “Closing Date”) (together
with cash on hand) to (a) repay in full all of the outstanding
obligations of the Company and its subsidiaries under the 2012
Credit Agreement and to terminate the 2012 Credit Agreement, and
(b) pay fees and expenses in connection with the 2013 Credit
Facility. As discussed in more detail below, on August 1,
2013, the Company drew on the Company’s Term Loan B Facility
to (a) repay in full all of the outstanding loans under the
Term Loan A Facility and (b) redeem in full all of the then
outstanding Notes. The Company intends to use any future borrowings
under the Revolving Credit Facility to provide for working capital,
capital expenditures and other general corporate purposes of the
Company and from time to time fund a portion of certain
acquisitions, in each case subject to the terms and conditions set
forth in the 2013 Credit Agreement.
The 2013 Credit
Facility is guaranteed on a senior secured basis by all of the
Company’s existing and future wholly-owned domestic
subsidiaries (the “Credit Parties”). The 2013 Credit
Facility is secured on a first priority basis by the
Company’s and the Credit Parties’ assets. Upon the
redemption of the then outstanding Notes, the security interests
and guaranties of the Company and its Credit Parties under the
Indenture and the Notes were terminated and released.
The
Company’s borrowings under the 2013 Credit Facility bear
interest on the outstanding principal amount thereof from the date
when made at a rate per annum equal to either: (i) the Base
Rate (as defined in the 2013 Credit Agreement) plus the Applicable
Margin (as defined in the 2013 Credit Agreement); or
(ii) LIBOR (as defined in the 2013 Credit Agreement) plus the
Applicable Margin (as defined in the 2013 Credit Agreement). As of
December 31, 2013, the Company’s effective interest rate
was 3.5%. The Term Loan A Facility expired on the Term Loan B
Borrowing Date, which was August 1, 2013. The Term Loan B
Facility expires on May 31, 2020 (the “Term Loan B
Maturity Date”) and the Revolving Credit Facility expires on
May 31, 2018 (the “Revolving Loan Maturity
Date”).
As defined in
the 2013 Credit Facility, “Applicable Margin”
means:
(a) with
respect to the Term Loans (i) if a Base Rate Loan, one and one
half percent (1.50%) per annum and (ii) if a LIBOR Rate
Loan, two and one half percent (2.50%) per annum;
and
(b) with
respect to the Revolving Loans:
(i) for the
period commencing on the Closing Date through the last day of the
calendar month during which financial statements for the fiscal
quarter ending September 30, 2013 are delivered: (A) if a
Base Rate Loan, one and one half percent (1.50%) per annum and
(B) if a LIBOR Rate Loan, two and one half percent
(2.50%) per annum; and
(ii)
thereafter, the Applicable Margin for the Revolving Loans shall
equal the applicable LIBOR margin or Base Rate margin in effect
from time to time determined as set forth below based upon the
applicable First Lien Net Leverage Ratio then in effect pursuant to
the appropriate column under the table below:
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First Lien
Net Leverage Ratio
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LIBOR Margin |
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Base Rate Margin |
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³ 4.50 to 1.00
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2.50 |
% |
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1.50 |
% |
< 4.50 to
1.00
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2.25 |
% |
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1.25 |
% |
In the event
the Company engages in a transaction that has the effect of
reducing the yield of any loans outstanding under the Term Loan B
Facility within six months of the Term Loan B Borrowing Date, the
Company will owe 1% of the amount of the loans so repriced or
replaced to the Lenders thereof (such fee, the “Repricing
Fee”). Other than the Repricing Fee, the amounts outstanding
under the 2013 Credit Facility may be prepaid at the option of the
Company without premium or penalty, provided that certain
limitations are observed, and subject to customary breakage fees in
connection with the prepayment of a LIBOR rate loan. The principal
amount of the (i) Term Loan A Facility shall be paid in full
on the Term Loan B Borrowing Date, (ii) Term Loan B Facility
shall be paid in installments on the dates and in the respective
amounts set forth in the 2013 Credit Agreement, with the final
balance due on the Term Loan B Maturity Date and
(iii) Revolving Credit Facility shall be due on the Revolving
Loan Maturity Date.
Subject to
certain exceptions, the 2013 Credit Agreement contains covenants
that limit the ability of the Company and the Credit Parties to,
among other things:
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incur additional indebtedness or change or amend the terms of
any senior indebtedness, subject to certain conditions;
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incur liens on the property or assets of the Company and the
Credit Parties;
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dispose of certain assets;
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consummate any merger, consolidation or sale of substantially
all assets;
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make certain investments;
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enter into transactions with affiliates;
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use loan proceeds to purchase or carry margin stock or for any
other prohibited purpose;
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incur certain contingent obligations;
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make certain restricted payments; and
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enter new lines of business, change accounting methods or amend
the organizational documents of the Company or any Credit Party in
any materially adverse way to the agent or the lenders.
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The 2013 Credit
Agreement also requires compliance with a financial covenant
related to total net leverage ratio (calculated as set forth in the
2013 Credit Agreement) in the event that the revolving credit
facility is drawn.
The 2013 Credit
Agreement also provides for certain customary events of default,
including the following:
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default for three (3) business days in the payment of
interest on borrowings under the 2013 Credit Facility when
due;
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default in payment when due of the principal amount of
borrowings under the 2013 Credit Facility;
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failure by the Company or any Credit Party to comply with the
negative covenants, financial covenants (provided, that, an event
of default under the Term Loan Facilities will not have occurred
due to a violation of the financial covenants until the revolving
lenders have terminated their commitments and declared all
obligations to be due and payable), and certain other covenants
relating to maintenance of customary property insurance coverage,
maintenance of books and accounting records and permitted uses of
proceeds from borrowings under the 2013 Credit Facility, each as
set forth in the 2013 Credit Agreement;
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failure by the Company or any Credit Party to comply with any
of the other agreements in the 2013 Credit Agreement and related
loan documents that continues for thirty (30) days (or ten
(10) days in the case of certain financial statement delivery
obligations) after officers of the Company first become aware of
such failure or first receive written notice of such failure from
any lender;
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default in the payment of other indebtedness if the amount of
such indebtedness aggregates to $15.0 million or more, or failure
to comply with the terms of any agreements related to such
indebtedness if the holder or holders of such indebtedness can
cause such indebtedness to be declared due and payable;
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failure of the Company or any Credit Party to pay, vacate or
stay final judgments aggregating over $15.0 million for a period of
thirty (30) days after the entry thereof;
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certain events of bankruptcy or insolvency with respect to the
Company or any Credit Party;
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certain change of control events;
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the revocation or invalidation of any agreement or instrument
governing the Notes or any subordinated indebtedness, including the
Intercreditor Agreement; and
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any termination, suspension, revocation, forfeiture, expiration
(without timely application for renewal) or material adverse
amendment of any material media license.
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In connection
with the Company’s entering into the 2013 Credit Agreement,
the Company and the Credit Parties also entered into an Amended and
Restated Security Agreement, pursuant to which the Company and the
Credit Parties each granted a first priority security interest in
the collateral securing the 2013 Credit Facility for the benefit of
the lenders under the 2013 Credit Facility.
On
August 1, 2013, the Company drew on borrowings under the
Company’s Term Loan B Facility. The borrowings were used
to (i) repay in full all of the outstanding loans under the
Company’s Term Loan A Facility; (ii) redeem in full and
terminate all of its outstanding obligations (the
“Redemption”) on August 2, 2013 (the
“Redemption Date”) under the Indenture, in an aggregate
principal amount of approximately $324 million, and (iii) pay
any fees and expenses in connection therewith. The redemption
price for the redeemed Notes was 106.563% of the principal amount,
plus accrued and unpaid interest thereon to the Redemption
Date.
The Redemption
constituted a complete redemption of the then outstanding Notes,
such that no amount remained outstanding following the
Redemption. Accordingly, the Indenture has been satisfied and
discharged in accordance with its terms and the Notes have been
cancelled, effective as of the Redemption Date. The Company
recorded a loss on debt extinguishment of $29.7 million, primarily
due to the premium associated with the redemption of the Notes, the
unamortized bond discount and finance costs.
On
December 31, 2013, the Company made a prepayment of $10
million to reduce the amount of loans outstanding under the Term
Loan B facility.
The carrying
amount and estimated fair value of the Term Loan B as of
December 31, 2013 were both $364.1 million. The estimated fair
value is calculated using an income approach which projects
expected future cash flows and discounts them using a rate based on
industry and market yields.