Quarterly report pursuant to Section 13 or 15(d)

Long-Term Debt and Borrowing Arrangements

v3.21.2
Long-Term Debt and Borrowing Arrangements
 9 Months Ended
Sep. 30, 2021
Debt Disclosure [Abstract]  
Long-Term Debt and Borrowing Arrangements
9. LONG-TERM DEBT AND BORROWING ARRANGEMENTS
The Company’s indebtedness consisted of:
September 30, 2021 December 31, 2020
Long-term debt: (a)
Amount
Weighted Average Rate (b)
Amount
Weighted Average Rate (b)
$750 million revolving credit facility (due May 2023) $ —  $ — 
Term loan (due May 2025) 1,544  3.10% 1,554  3.18%
5.375% senior unsecured notes (due April 2026) —  496  5.38%
4.375% senior unsecured notes (due August 2028) 492  4.38% 492  4.38%
Finance leases 52  4.50% 55  4.50%
Total long-term debt 2,088  2,597 
Less: Current portion of long-term debt 21  21 
Long-term debt $ 2,067  $ 2,576 
______________________
(a)    The carrying amount of the term loan and senior unsecured notes are net of deferred debt issuance costs of $15 million and $22 million as of September 30, 2021 and December 31, 2020, respectively.
(b)    Weighted average interest rates are based on period-end balances, including the effects from hedging.

Maturities and capacity
The Company’s outstanding debt as of September 30, 2021 matures as follows:
Long-Term Debt
Within 1 year $ 21 
Between 1 and 2 years 21 
Between 2 and 3 years 22 
Between 3 and 4 years 1,502 
Between 4 and 5 years 7 
Thereafter 515 
Total $ 2,088 
As of September 30, 2021, the available capacity under the Company’s revolving credit facility was as follows:
Revolving Credit Facility
Total capacity $ 750 
Less: Letters of credit 15 
Available capacity $ 735 
5.375% Senior Unsecured Notes
On April 15, 2021, the Company redeemed all of its $500 million 5.375% senior unsecured notes due 2026, which was primarily funded through cash on hand. Due to this redemption, the Company incurred an $18 million charge in the second quarter of 2021, including $13 million of call premiums and $5 million from the acceleration of deferred financing fees. Such charge is reported as early extinguishment of debt on the Condensed Consolidated Statement of Income/(Loss).
Deferred debt issuance costs
The Company classifies deferred debt issuance costs related to its revolving credit facility within other non-current assets on the Condensed Consolidated Balance Sheets. Such deferred debt issuance costs were $3 million and $4 million as of September 30, 2021 and December 31, 2020, respectively.
Cash flow hedge
In 2018, the Company hedged a portion of its $1.6 billion term loan. The pay-fixed/receive-variable interest rate swaps hedge $1.1 billion of the Company’s term loan interest rate exposure, of which $600 million expires in the second quarter of 2024 and has a weighted average fixed rate of 2.52% and $500 million expires in the fourth quarter of 2024 and has a weighted average fixed rate of 1.09%. The variable rates of the swap agreements are based on one-month LIBOR. The aggregate fair value of these interest rate swaps was a liability of $42 million and $71 million as of September 30, 2021 and December 31, 2020, respectively, which was included within other non-current liabilities on the Condensed Consolidated Balance Sheets. The effect of interest rate swaps on interest expense, net on the Condensed Consolidated Statements of Income/(Loss) was $7 million of expense in each of the three months ended September 30, 2021 and 2020 and $19 million and $15 million of expense for the nine months ended September 30, 2021 and 2020, respectively.
There was no hedging ineffectiveness recognized in the nine months ended September 30, 2021 or 2020. The Company expects to reclassify approximately $23 million of losses from accumulated other comprehensive income (“AOCI”) (loss) to interest expense during the next 12 months.
Interest expense, net
The Company incurred net interest expense of $22 million and $29 million for the three months ended September 30, 2021 and 2020, respectively, and $73 million and $83 million for the nine months ended September 30, 2021 and 2020, respectively. Cash paid related to such interest was $81 million and $71 million for the nine months ended September 30, 2021 and 2020, respectively.