Long-Term Debt | Note 12. Long-Term Debt Long-term debt is summarized in the following table: As of As of March 31, December 31, (In millions) 2020 2019 Senior secured term loan facility maturing in 2026 (1) $ 592 $ 593 Revolving credit facility maturing 2024 — — 5.125 % notes maturing in 2024 (2) 742 742 7.45 % notes maturing in 2027 (3) 167 167 7.25 % notes maturing in 2038 (3) 40 40 Vehicle finance leases (4) 94 95 Other (5) 86 100 Less current portion (6) ( 100 ) ( 70 ) Total long-term debt $ 1,622 $ 1,667 __________________________________ (1) As of March 31, 2020 and December 31, 2019, presented net of $ 6 million in unamortized debt issuance costs in each period and $ 1 million of unamortized original issue discount in each period. (2) As of March 31, 2020 and December 31, 2019, presented net of $ 8 million in unamortized debt issuance costs in each period. (3) As of March 31, 2020 and December 31, 2019, collectively presented net of $ 27 million and $ 28 million, respectively, of unamortized fair value adjustments related to purchase accounting, which increases the effective interest rate from the coupon rates shown above. (4) We have entered into a fleet management services agreement (the “Fleet Agreement”) which, among other things, allows us to obtain fleet vehicles through a leasing program. All leases under the Fleet Agreement are finance leases for accounting purposes. The lease rental payments include an interest component calculated using a variable rate based on one-month LIBOR plus other contractual adjustments and a borrowing margin totaling 2.45 percent. (5) As of March 31, 2020 and December 31, 2019, includes approximately $ 86 million and $ 91 million, respectively, of future payments in connection with acquisitions. (6) The increase in the current portion of long-term debt consists of deferred purchase price and earnout payments on acquisitions due within 12 months. Term Loan Facility On November 5, 2019, we closed on an amended $ 600 million Term Loan B due 2026, as well as a $ 400 million revolving credit agreement due 2024 (the “Amended Term Loan Facility”). The interest rates applicable to the loans under the Amended Term Loan Facility are based on a fluctuating rate of interest measured by reference to either, at the borrower’s option, (i) an adjusted LIBOR plus 1.75 % per annum, or (ii) an alternate base rate (“ABR”) plus 0.75 % per annum. Voluntary prepayments of borrowings under the Amended Term Loan Facility are permitted at any time, in minimum principal amounts, without premium or penalty unless such prepayment is in connection with a repricing transaction on or prior to the 6-month anniversary of the closing date of the Amended Credit Facilities, in which case a 1 % premium shall be required to be paid. The Term Loan Facility and the guarantees thereof are secured by substantially all of the tangible and intangible assets of the Company and certain of our domestic subsidiaries, excluding certain subsidiaries subject to regulatory requirements in various states, including pledges of all the capital stock of all direct domestic subsidiaries (other than foreign subsidiary holding companies, which are deemed to be foreign subsidiaries) owned by the Company or any Guarantor and of up to 65 % of the capital stock of each direct foreign subsidiary owned by the Company or any Guarantor. The Term Loan Facility security interests are subject to certain exceptions, including, but not limited to, exceptions for (i) equity interests, (ii) indebtedness or other obligations of subsidiaries, (iii) real estate or (iv) any other assets, if the granting of a security interest therein would require that the 7.45 % notes maturing in 2027 or 7.25 % notes maturing in 2038 be secured. The Term Loan Facility is secured on a pari passu basis with the security interests created in the same collateral securing the Revolving Credit Facility. Extinguishment of Debt and Repurchase of Notes On March 12, 2019, in connection with the spin-off of the American Home Shield segment, we borrowed an aggregate principal amount of $ 600 million under a short-term credit facility to effectuate a debt-for-equity exchange of our Frontdoor retained shares. The proceeds of this short-term credit facility were used to repay $ 468 million aggregate principal amount of term loans outstanding under our senior secured term loan facility in March and April of 2019. Such prepayments resulted in a loss on extinguishment of debt of $ 4 million for the three months ended March 31, 2019. On March 27, 2019, we completed a non-cash debt-for-equity exchange in which we exchanged the 16.7 million retained shares of Frontdoor common stock (proceeds of $ 486 million, net), plus used $ 114 million of proceeds from the short-term credit facility, to extinguish $ 600 million of our indebtedness under the short-term credit facility. The sale of the Frontdoor common stock resulted in a realized gain of $ 40 million, which was recorded within Realized (gain) on investment in frontdoor, inc. on the Condensed Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2019. In March 2019, we purchased approximately $ 7 million in aggregate principal amount of our 7.45 % notes maturing in 2027 at a price of 105.5 % and $ 3 million in aggregate principal amount of our 7.25 % notes maturing in 2038 at a price of 99.5 % using available cash. The repurchased notes were delivered to the trustee for cancellation. In connection with these partial repurchases, we recorded a loss on extinguishment of debt of $ 2 million in the three months ended March 31, 2019. In April 2019, we purchased $ 1 million in aggregate principal amount of our 7.45 % notes maturing in 2027 at a price of 105.5 %. Interest Rate Swaps We have historically entered into interest rate swap agreements. Under the terms of these agreements, we pay a fixed rate of interest on the stated notional amount and receive a floating rate of interest (based on one month LIBOR) on the stated notional amount. Therefore, during the term of the swap agreements, the effective interest rate on the portion of the term loans equal to the stated notional amount is fixed at the stated rate in the interest rate swap agreements plus the incremental borrowing margin. On November 5, 2019, we entered into a seven year interest swap agreement effective November 5, 2019. The notional amount of the agreement is $ 550 million. Under the terms of the agreement, we will pay a fixed rate of interest of 1.615 % on the $ 550 million notional amount, and we will receive a floating rate of interest (based on one-month LIBOR, subject to a floor of zero percent) on the notional amount. Therefore, during the term of the agreement, the effective interest rate on $ 550 million of the new Term Loan B is fixed at a rate of 3.365 %. In connection with the repayments of our previous Term Loan B due 2023 in 2019, in the three months ended March 31, 2019, we terminated $ 441 million of our then existing $ 650 million interest rate swap agreement, receiving $ 11 million from the counterparty. We terminated an additional $ 38 million of the remaining interest rate swap in the three months ended June 30, 2019, receiving $ 1 million from the counterparty. The remaining $ 171 million interest rate swap was terminated in November 2019 upon the final repayment of our previous Term Loan B due 2023, with no proceeds from the counterparty. The fair value of the terminated agreement of $ 12 million is recorded within accumulated other comprehensive income on the Condensed Consolidated Statements of Financial Position and will be amortized into interest expense over the original term of the agreement. The remaining unamortized balance at March 31, 2020 is $ 7 million. The changes in our interest rate swap agreement, as well as the cumulative interest rate swap outstanding, are as follows: Notional (In millions) Amount Fixed Rate (1) Interest rate swap agreement in effect as of December 31, 2018 $ 650 1.493 % Terminated — Entered into effect — Interest rate swap agreement in effect as of March 31, 2019 $ 650 1.493 % Terminated ( 650 ) Entered into effect 550 1.615 % Interest rate swap agreement in effect as of December 31, 2019 $ 550 1.615 % Terminated — Entered into effect — Interest rate swap agreement in effect as of March 31, 2020 $ 550 1.615 % ___________________________________ (1) Before the application of the applicable borrowing margin. In accordance with accounting standards for derivative instruments and hedging activities, and as further described in Note 17, our interest rate swap agreement is classified as a cash flow hedge, and, as such, is recorded on the Condensed Consolidated Statements of Financial Position as either an asset or liability at fair value, with changes in fair value attributable to the hedged risks recorded in accumulated other comprehensive income. |