Long-Term Debt | 9 Months Ended |
Sep. 30, 2013 |
Long-Term Debt Disclosure [Abstract] | ' |
Long-Term Debt | ' |
Long-term Debt |
Obligations in the form of senior notes and borrowings under the revolving credit facility are as follows: |
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| September 30, 2013 | | December 31, 2012 |
Senior notes | $ | 2,800 | | | $ | 1,965 | |
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Revolving loans | 176 | | | 192 | |
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Total | 2,976 | | | 2,157 | |
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Less: current portion | — | | | — | |
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Long-term debt | $ | 2,976 | | | $ | 2,157 | |
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Availability under revolving credit facility: | | | |
Total credit facility limit | $ | 1,200 | | | $ | 1,150 | |
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Revolving loans | (176 | ) | | (192 | ) |
Letters of credit | (15 | ) | | (12 | ) |
Total available | $ | 1,009 | | | $ | 946 | |
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Long-term debt maturities as of September 30, 2013 for each of the next five years are as follows: |
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Years Ending December 31, | | Amount | | | |
2013 (remainder) | | $ | — | | | | |
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2014 | | — | | | | |
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2015 | | — | | | | |
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2016 | | — | | | | |
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2017 | | — | | | | |
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Thereafter | | 2,976 | | | | |
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Total | | $ | 2,976 | | | | |
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Revolving Credit Facility |
The weighted average interest rate on the total amounts outstanding under the Partnership’s revolving credit facility was 2.19% as of September 30, 2013. |
In May 2013, RGS entered into the Sixth Amended and Restated Credit Agreement to increase the commitment to $1.2 billion with a $300 million uncommitted incremental facility and extended the maturity date to May 21, 2018. The material differences between the Fifth and Sixth Amended and Restated Credit Agreement include: |
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• | A 75 bps decrease in pricing, with an additional 50 bps decrease upon the achievement of an investment grade rating; | | | | | | |
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• | No limitation on the maximum amount that the loan parties may invest in joint ventures existing on the date of the credit agreement so long as the Partnership is in pro forma compliance with the financial covenants; | | | | | | |
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• | The addition of a “Restricted Subsidiary” structure such that certain designated subsidiaries are not subject to the credit facility covenants and do not guarantee the obligations thereunder or pledge their assets in support thereof; | | | | | | |
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• | The addition of provisions such that upon the achievement of an investment grade rating by the Partnership, the collateral package will be released; the facility will become unsecured; and the covenant package will be significantly reduced; | | | | | | |
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• | An eight-quarter increase in the permitted Total Leverage Ratio; and | | | | | | |
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• | After March 2015, an increase in the permitted Total Leverage Ratio for the two fiscal quarters following any $50 million or greater acquisition. | | | | | | |
The new credit agreement and the guarantees are senior to the Partnership’s and the guarantors’ secured obligations, including the Series A preferred units. As of September 30, 2013, the Partnership was in compliance with all of the financial covenants contained within the new credit agreement. |
The Partnership treated the May 2013 amendment of the revolving credit facility as a modification of an existing revolving credit agreement and, therefore, wrote off debt issuance costs of less than $1 million to interest expense, net in the period from January 1, 2013 to September 30, 2013. In addition, the Partnership capitalized $7 million of loan fees which is being amortized over the remaining term. |
4.5% Senior Notes Due 2023 |
In April 2013, in conjunction with financing the SUGS Acquisition, the Partnership and Finance Corp. issued $600 million senior notes in a private placement (the “2023 4.5% Notes”). The 2023 4.5% Notes bear interest at 4.5% payable semi-annually in arrears on May 1 and November 1, commencing November 1, 2013 and mature on November 1, 2023. |
At any time prior to August 1, 2023, the Partnership may redeem some or all of the 2023 4.5% Notes at a price equal to 100% of the principal amount plus a make-whole premium and accrued interest. On or after August 1, 2023, the Partnership may redeem some or all of the 2023 4.5% Notes at a price equal to 100% plus accrued interest. |
9.375% Senior Notes Due 2016 |
In June 2013, the Partnership redeemed all of the $163 million outstanding 9.375% Senior Notes due 2016 for $178 million cash, inclusive of accrued and unpaid interest of $7 million and other fees and expenses. |
5.75% Senior Notes Due 2020 |
In September 2013, the Partnership and Finance Corp. issued $400 million senior notes due September 1, 2020 (the “2020 Notes”). The 2020 Notes bear interest at 5.75% payable semi-annually on March 1 and September 1, commencing March 1, 2014, and mature on September 1, 2020. |
At any time prior to June 1, 2020, the Partnership may redeem some or all of the 2020 Notes at a price equal to 100% of the principal amount plus a make-whole premium and accrued interest. On or after June 1, 2020, the Partnership may redeem some or all of the 2020 Notes at a price equal to 100% plus accrued interest. |
Covenants |
Upon a change of control, as defined in the indentures, followed by a ratings decline within 90 days, each holder of the 2023 4.5% Notes and the 2020 Notes will be entitled to require us to purchase all or a portion of its notes at a purchase price of 101% of the principal amount plus accrued interest and liquidated damages, if any. Our ability to purchase the notes upon a change of control will be limited by the terms of our debt agreements, including our revolving credit facility. |
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The 2023 4.5% Notes and the 2020 Notes contain various covenants that limit, among other things, our ability, and the ability of certain of our subsidiaries, to: |
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• | incur additional indebtedness; | | | | | | |
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• | pay distributions on, or repurchase or redeem our equity interests; | | | | | | |
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• | make certain investments; | | | | | | |
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• | incur liens; | | | | | | |
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• | enter into certain types of transactions with affiliates; and | | | | | | |
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• | sell assets or consolidate or merge with or into other companies. | | | | | | |
At September 30, 2013, the Partnership was in compliance with all covenants. |
If the 2023 4.5% Notes and the 2020 Notes achieve investment grade ratings by both Moody’s and S&P and no default or event of default has occurred and is continuing, we will no longer be subject to many of the foregoing covenants. |
The 2023 4.5% Notes and the 2020 Notes are jointly and severally guaranteed by all of our consolidated subsidiaries, other than Finance Corp. and a minor subsidiary. The senior notes and guarantees are unsecured and rank equally with all of our and the guarantors’ existing and future unsecured obligations. The senior notes and the guarantees will be senior in right of payment to any of our and the guarantor’s future obligations that are, by their terms, expressly subordinated in right of payment to the notes and the guarantees. The senior notes and the guarantees will be effectively subordinated to our and the guarantors’ secured obligations, including our revolving credit facility, to the extent of the value of the assets securing such obligations. |
Finance Corp. has no operations and will not have revenues other than as may be incidental as co-issuer of the Senior Notes. Since the guarantees are fully unconditional and joint and several of its subsidiaries, except for a minor subsidiary, the Partnership has not included condensed consolidated financial information of guarantors of the Senior Notes. |