Quarterly report pursuant to Section 13 or 15(d)

Long-Term Debt

v3.4.0.3
Long-Term Debt
3 Months Ended
Mar. 31, 2016
Debt Disclosure [Abstract]  
Long-Term Debt
Long-Term Debt
 
Long-term debt consisted of the following (amounts in thousands):
 
 
March 31,
2016
 
December 31,
2015
9.125% Senior Notes due April 1, 2020 with an effective interest rate of 9.4%
$
576,691

 
$
576,241

Promissory Note to Ascent Capital due October 1, 2020 with an effective rate of 12.5% (a)
12,000

 
100,000

Term loans, mature April 9, 2022, LIBOR plus 3.5%, subject to a LIBOR floor of 1.00%, with an effective rate of 5.1%
541,157

 
542,420

Term loans, mature March 23, 2018, LIBOR plus 3.25%, subject to a LIBOR floor of 1.00% with an effective rate of 5.0%
395,858

 
394,938

$315 million revolving credit facility, matures December 22, 2017, LIBOR plus 3.75%, subject to a LIBOR floor of 1.00% with an effective rate of 5.9%
153,258

 
131,048

 
1,678,964

 
1,744,647

Less current portion of long-term debt
(5,500
)
 
(5,500
)
Long-term debt
$
1,673,464

 
$
1,739,147

 

(a)
The effective rate was 9.868% until February 29, 2016.
 
Senior Notes
 
The senior notes total $585,000,000 in principal, mature on April 1, 2020 and bear interest at 9.125% per annum (the "Senior Notes").  Interest payments are due semi-annually on April 1 and October 1 of each year. The Senior Notes are guaranteed by all of the Company's existing domestic subsidiaries.  Ascent Capital has not guaranteed any of the Company's obligations under the Senior Notes. As of March 31, 2016, the Senior Notes had deferred financing costs, net of accumulated amortization of $8,309,000.
 
Ascent Intercompany Loan
 
On February 29, 2016, the Company retired the existing intercompany loan with an outstanding principal amount of $100,000,000 and executed and delivered a Promissory Note to Ascent Capital in a principal amount of $12,000,000 (the "Ascent Intercompany Loan"), with the $88,000,000 remaining principal to be a capital contribution.  The entire principal amount under the Ascent Intercompany Loan is due on October 1, 2020.  The Company may prepay any portion of the balance of the Ascent Intercompany Loan at any time from time to time without fee, premium or penalty (subject to certain financial covenants associated with the Company’s other indebtedness).  Any unpaid balance of the Ascent Intercompany Loan bears interest at a rate equal to 12.5% per annum, payable semi-annually in cash in arrears on January 12 and July 12 of each year, commencing on January 12, 2014.  The effective rate was 12.5% as of March 31, 2016 and 9.868% as of December 31, 2015. Borrowings under the Ascent Intercompany Loan constitute unsecured obligations of the Company and are not guaranteed by any of the Company’s subsidiaries.
 
Credit Facility

The Company has senior secured term loans totaling $948,284,000 in principal with $403,784,000 maturing in March 2018 (the "2018 Term Loans") and $544,500,000 maturing in April 2022 (the "2022 Term Loans"). Monitronics also has a $315,000,000 revolving credit facility, maturing December 22, 2017 of which $155,200,000 is outstanding as of March 31, 2016 (the senior secured term loans together with the revolving credit facility, the "Credit Facility").
 
The 2018 Term Loans bear interest at LIBOR plus 3.25%, subject to a LIBOR floor of 1.00%, and mature on March 23, 2018. Interest payments on the 2018 Term Loans are due quarterly with the principal due at maturity. The 2022 Term Loans bear interest at LIBOR plus 3.50%, subject to a LIBOR floor of 1.00% and mature on April 9, 2022. Interest and principal payments of approximately $1,375,000 are due quarterly on the 2022 Term Loans with the remaining principal due at maturity.  The Credit Facility revolver bears interest at LIBOR plus 3.75%, subject to a LIBOR floor of 1.00%, and matures on December 22, 2017.  There is an annual commitment fee of 0.50% on unused portions of the Credit Facility revolver. 

On March 30, 2016, the Company borrowed $40,800,000 on the Credit Facility revolver to fund its April 1, 2016 interest payment due under the Senior Notes of $26,691,000 and other business activities.
 
At any time after the occurrence of an event of default under the Credit Facility, the lenders may, among other options, declare any amounts outstanding under the Credit Facility immediately due and payable and terminate any commitment to make further loans under the Credit Facility.  In addition, failure to comply with restrictions contained in the Senior Notes could lead to an event of default under the Credit Facility.


The Credit Facility is secured by a pledge of all of the outstanding stock of the Company and all of its existing subsidiaries and is guaranteed by all of the Company’s existing domestic subsidiaries.  Ascent Capital has not guaranteed any of the Company’s obligations under the Credit Facility.

As of March 31, 2016, the Company has deferred financing costs and unamortized discounts, net of accumulated amortization, of $13,211,000 related to the Credit Facility.

In order to reduce the financial risk related to changes in interest rates associated with the floating rate term loans under the Credit Facility term loans, the Company has entered into interest rate swap agreements with terms similar to the Credit Facility term loans (all outstanding interest rate swap agreements are collectively referred to as the “Swaps”). The Swaps have been designated as effective hedges of the Company’s variable rate debt and qualify for hedge accounting.  As a result of these interest rate swaps, the Company's current effective weighted average interest rate on the borrowings under the Credit Facility term loans is 5.15%. See note 6, Derivatives, for further disclosures related to these derivative instruments. 
  
The terms of the Senior Notes and Credit Facility provide for certain financial and nonfinancial covenants.  As of March 31, 2016, the Company was in compliance with all required covenants.

As of March 31, 2016, principal payments scheduled to be made on the Company’s debt obligations are as follows (amounts in thousands):
Remainder of 2016
$
4,125

2017
160,700

2018
409,284

2019
5,500

2020
602,500

2021
5,500

Thereafter
512,875

Total principal payments
1,700,484

Less:
 

Unamortized deferred debt costs, discount and premium, net
21,520

Total debt on condensed consolidated balance sheet
$
1,678,964