Long-Term Debt | Long-Term Debt The following table sets forth the Company's outstanding debt obligations on the consolidated balance sheets at June 30, 2015 and December 31, 2014 . Interest Rates Carrying Value Maturity At June 30, 2015 At December 31, 2014 At June 30, At December 31, (in millions) Senior secured credit facilities SuperMedia Inc. December 31, 2016 11.6 % 11.6 % $ 843 $ 841 R.H. Donnelly Inc. December 31, 2016 9.75 % 9.75 % 596 612 Dex Media East, Inc. December 31, 2016 6.0 % 6.0 % 332 354 Dex Media West, Inc. December 31, 2016 8.0 % 8.0 % 303 337 Senior subordinated notes January 29, 2017 14.0 % 14.0 % 261 252 Total debt 2,335 2,396 Less: current maturities of long-term debt 124 124 Long-term debt $ 2,211 $ 2,272 As a result of the merger and adoption of acquisition accounting on April 30, 2013, SuperMedia's debt obligation was recorded at its fair value of $1,082 million , from its face value of $1,442 million , resulting in a discount of $360 million . This debt fair value adjustment is being amortized as an increase to interest expense over the remaining term of the SuperMedia debt obligation using the effective interest method and does not impact future interest or principal payments. Amortization of the SuperMedia debt fair value adjustment of $22 million and $42 million was included in interest expense during the three and six months ended June 30, 2015 , respectively, compared to $19 million and $36 million for the three and six months ended June 30, 2014 , respectively. The unamortized portion of the SuperMedia discount as of June 30, 2015 was $161 million . The par value of SuperMedia's debt obligation at June 30, 2015 was $1,004 million . Effective March 10, 2015, the Company obtained an amendment to the DMW senior secured credit facility to permit the exclusion of one-time, nonrecurring cash expenditures associated with our business transformation program from the definition of earnings before interest, taxes, depreciation and amortization ("EBITDA") that is used for the leverage ratio covenant measure. An amendment fee of $5 million was paid and recorded as a discount on the DMW senior secured credit facility. The debt discount is being amortized as an increase to interest expense over the remaining term of the DMW debt obligation using the effective interest method and does not impact future interest or principal payments. Amortization of the DMW discount of $1 million was included in interest expense during the three and six months ended June 30, 2015 . The unamortized portion of the DMW debt discount at June 30, 2015 was $4 million . The par value of DMW's debt obligations at June 30, 2015 was $307 million . Debt Issuance Costs Certain costs associated with the issuance of our senior secured credit facilities were capitalized and are included in other non-current assets on the Company's consolidated balance sheet. At June 30, 2015 , the Company has deferred debt issuance costs of $3 million on its consolidated balance sheet. These costs are amortized to interest expense over the remaining term of the related senior secured credit facilities using the effective interest method. Senior Secured Credit Facilities In connection with the consummation of the Prepackaged Plans and the merger between Dex One and SuperMedia on April 30, 2013, Dex Media entered into an amended and restated loan agreement for SuperMedia and three amended and restated credit agreements for each of DME, DMW and RHD (collectively, the "senior secured credit facilities"), with named financial institutions and JPMorgan Chase Bank, N.A. as administrative agent and collateral agent under the SuperMedia, DME and DMW senior secured credit facilities, and Deutsche Bank Trust Company Americas as administrative agent and collateral agent under the RHD senior secured credit facility. SuperMedia Senior Secured Credit Facility The SuperMedia senior secured credit facility interest is paid (1) with respect to any base rate loan, quarterly, and (2) with respect to any Eurodollar loan, on the last day of the interest period applicable to such borrowing, at SuperMedia's option, at either: • With respect to base rate loans, the highest (subject to a floor of 4.00% ) of (1) the prime rate, (2) the federal funds effective rate plus 0.50% , or (3) adjusted London Inter-Bank Offered Rate ("LIBOR") plus 1.00% , plus an interest rate margin of 7.60% , or • With respect to Eurodollar loans, the higher of (1) adjusted LIBOR or (2) 3.00% , plus an interest rate margin of 8.60% . SuperMedia may elect interest periods of one , two or three months for Eurodollar borrowings. RHD Senior Secured Credit Facility The RHD senior secured credit facility interest is paid (1) with respect to any base rate loan, quarterly, and (2) with respect to any Eurodollar loan, on the last day of the interest period applicable to such borrowing (with certain exceptions for interest periods of more than three months), at RHD's option, at either: • With respect to base rate loans, the highest (subject to a floor of 4.00% ) of (1) the prime rate, (2) the federal funds effective rate plus 0.50% , or (3) adjusted LIBOR plus 1.00% , plus an interest rate margin of 5.75% , or • With respect to Eurodollar loans, the higher of (1) adjusted LIBOR or (2) 3.00% , plus an interest rate margin of 6.75% . RHD may elect interest periods of one , two , three or six months for Eurodollar borrowings. DME Senior Secured Credit Facility The DME senior secured credit facility interest is paid (1) with respect to any base rate loan, quarterly, and (2) with respect to any Eurodollar loan, on the last day of the interest period applicable to such borrowing (with certain exceptions for interest periods of more than three months), at DME's option, at either: • With respect to base rate loans, the highest (subject to a floor of 4.00% ) of (1) the prime rate, (2) the federal funds effective rate plus 0.50% , or (3) adjusted LIBOR plus 1.00% , plus an interest rate margin of 2.00% , or • With respect to Eurodollar loans, the higher of (1) adjusted LIBOR or (2) 3.00% , plus an interest rate margin of 3.00% . DME may elect interest periods of one , two , three or six months for Eurodollar borrowings. DMW Senior Secured Credit Facility The DMW senior secured credit facility interest is paid (1) with respect to any base rate loan, quarterly, and (2) with respect to any Eurodollar loan, on the last day of the interest period applicable to such borrowing (with certain exceptions for interest periods of more than three months), at DMW's option, at either: • With respect to base rate loans, the highest (subject to a floor of 4.00% ) of (1) the prime rate, (2) the federal funds effective rate, plus 0.50% , or (3) adjusted LIBOR, plus 1.00% , plus an interest rate margin of 4.00% , or • With respect to Eurodollar loans, the higher of (1) adjusted LIBOR or (2) 3.00% , plus an interest rate margin of 5.00% . DMW may elect interest periods of one , two , three or six months for Eurodollar borrowings. Senior Subordinated Notes The Company's senior subordinated notes require interest payments, payable semi-annually on March 31 and September 30 of each year. The senior subordinated notes accrue interest at 12% for cash interest payments and 14% for payments-in-kind ("PIK") interest. PIK interest represents additional indebtedness and increases the aggregate principal amount owed. The Company is required to make interest payments of 50% in cash and 50% in PIK interest until maturity of the senior secured credit facilities on December 31, 2016. For the semi-annual interest period ended March 31, 2015, the Company made interest payments of 50% in cash and 50% in PIK interest resulting in the issuance of an additional $9 million of senior subordinated notes. The Company is restricted from making open market repurchases of its senior subordinated notes until maturity of the senior secured credit facilities on December 31, 2016. The senior subordinated notes mature on January 29, 2017. Principal Payment Terms for Senior Secured Credit Facilities The Company has mandatory debt principal payments due after each quarter prior to the December 31, 2016 maturity date on its outstanding senior secured credit facilities. RHD, DME and DMW are required to pay scheduled amortization payments, plus additional prepayments at par equal to each borrower's respective Excess Cash Flow ("ECF"), multiplied by the applicable ECF Sweep Percentage as defined in the respective senior secured credit facility ( 60% for RHD, 50% for DMW, and 70% in 2013 and 2014 and 60% in 2015 and 2016 for DME). SuperMedia is required to make prepayments at par in an amount equal to 67.5% of any increase in Available Cash, as defined in its senior secured credit facility. In addition to these principal payments, the Company may on one or more occasions use another portion of ECF or the increase in Available Cash, as applicable, to repurchase debt at market prices ("Voluntary Prepayments") at a discount of face value, as defined in the respective senior secured credit facility ( 12.5% for SuperMedia, 20% for RHD, 30% for DMW, and 15% in 2013 and 2014 and 20% in 2015 and 2016 for DME) as determined following the end of each quarter. These Voluntary Prepayments must be made within 180 days after the date on which financial statements are delivered to the administrative agents. If a borrower does not make such Voluntary Prepayments within the 180 -day period, the Company must make a prepayment at par at the end of the quarter during which such 180 -day period expires. Any remaining portion of ECF or Available Cash, may be used at the Company's discretion, subject to certain restrictions specified in each senior secured credit facility agreement. 2015 and 2014 Principal Payments During the six months ended June 30, 2015 , the Company retired debt obligations of $108 million under its senior secured credit facilities utilizing cash of $107 million . The Company made mandatory and accelerated principal payments on its senior secured credit facilities, at par, of $100 million . Accelerated principal payments consist of prepayments of cash flow sweeps required under our senior secured credit facilities. In addition, on April 8, 2015 the Company repurchased and retired debt of $8 million utilizing cash of $7 million in accordance with the terms and conditions of its senior secured credit facilities. This transaction resulted in a gain of $1 million being recorded by the Company ( $1 million gain offset by less than $1 million in administrative fees and other adjustments). These debt retirements were partially offset by additional indebtedness from payment-in-kind interest of $9 million , on the Company's senior subordinated notes. During the six months ended June 30, 2014 , the Company retired debt obligations of $210 million under its senior secured credit facilities utilizing cash of $202 million . The Company made mandatory and accelerated principal payments on its senior secured credit facilities, at par, of $156 million . In addition, on June 16, 2014 the Company repurchased and retired debt of $54 million utilizing cash of $46 million in accordance with the terms and conditions of its senior secured credit facilities. This transaction resulted in no gain/(loss) being recorded by the Company (gain of $8 million offset by a $7 million write-off of SuperMedia's unamortized debt fair value adjustment and $1 million in administrative fees). These debt retirements were partially offset by additional indebtedness from payment-in-kind interest of $8 million , on the Company's senior subordinated notes. Debt Covenants Each of the senior secured credit facilities described above contain certain covenants that, subject to exceptions, limit or restrict each borrower's incurrence of liens, investments (including acquisitions), sales of assets, indebtedness, payment of dividends, distributions and payments of certain indebtedness, sale and leaseback transactions, swap transactions, affiliate transactions, capital expenditures and mergers, liquidations and consolidations. For each senior secured credit facility, we are required to maintain compliance with a consolidated leverage ratio covenant and a consolidated interest coverage ratio covenant (the “Financial Covenants”). Each of the senior secured credit facilities also contain certain covenants that, subject to exceptions, limit or restrict Dex Media's incurrence of liens, indebtedness, ownership of assets, sales of assets, payment of dividends or distributions or modifications of the senior subordinated notes. The senior subordinated notes contain certain covenants that, subject to certain exceptions, among other things, limit or restrict the Company's (and, in certain cases, the Company's restricted subsidiaries) incurrence of indebtedness, making of certain restricted payments, incurrence of liens, entry into transactions with affiliates, conduct of its business, mergers, and consolidation or sale of all or substantially all of its property. As of June 30, 2015 , the Company was in compliance with all of the Financial Covenants associated with its senior secured credit facilities. Management also evaluated compliance with its Financial Covenants associated with its senior secured credit facilities for the remainder of 2015 and 2016, using management’s most recent financial forecast. Based on its evaluation, management believes there is a risk that the Company may not be in compliance with its Financial Covenants in the latter half of 2015 for two of its senior secured credit facilities, and in 2016 for a third senior secured credit facility. In addition, all of the senior secured credit facilities mature on December 31, 2016 and the senior subordinated notes mature on January 29, 2017. Because the Company may not be in compliance with its Financial Covenants and it lacks the cash flow from operations to fully pay the senior secured credit facilities and senior subordinated notes at maturity, the Company will have to seek a restructuring, an amendment or refinancing of its debt, or if necessary, pursue additional debt or equity offerings, in advance of its debt becoming due. If we are unable to restructure our capital structure, we may consider filing voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code. Accordingly, and as announced by the Company on July 10, 2015, the Company has retained financial advisors Moelis & Company LLC and Alvarez & Marsal North America, LLC and legal advisors Kirkland & Ellis LLP to advise management and the board of directors in their evaluation of the Company’s capital structure, among other things. Guarantees Each of the senior secured credit facilities are separate facilities secured by the assets of each respective entity. There are no cross guarantees or collateralization provision among the entities, subject to certain exceptions. The Shared Guarantee and Collateral agreement has certain guarantee and collaterization provisions supporting SuperMedia, RHD, DME and DMW. However, an event of default by one of the entities could trigger a call on the applicable guarantor. An event of default by a guarantor on a guarantee obligation could be an event of default under the applicable credit facility, and if demand is made under the guarantee and the creditor accelerates the indebtedness, failure to satisfy such claims in full would in turn trigger a default under all of the other credit facilities. A subordinated guarantee also provides that SuperMedia, RHD, DME and DMW guarantee the obligations of the other such entities, including SuperMedia, provided that no claim may be made on such guarantee until the senior secured debt of such entity is satisfied and discharged. |