Debt and Capital Lease Obligations | 3 Months Ended |
Mar. 31, 2014 |
Debt Disclosure [Abstract] | ' |
Debt and Capital Lease Obligations | ' |
DEBT AND CAPITAL LEASE OBLIGATIONS |
1.875% CONVERTIBLE DEBENTURES |
In March 2008, the Company issued and sold $181.5 million aggregate principal amount of 1.875% senior unsecured convertible debentures due March 15, 2028, with interest payable semi-annually. Each $1,000 principal amount of the 1.875% debentures is initially convertible, at the option of the holders, into approximately 42.5351 shares of the Company’s common stock, at any time prior to the maturity date. The conversion rate is subject to certain adjustments, but will not be adjusted for accrued interest or any unpaid interest. The conversion rate initially represents a conversion price of $23.51 per share. |
In October 2009, the Company exchanged $15.0 million face amount of the 1.875% debentures for 1.84 million shares of the Company's common stock, leaving $166.5 million aggregate principal amount of the debentures outstanding at December 31, 2009. In March 2013, the holders of $164.3 million principal amount of the 1.875% debentures exercised their option to require the Company to redeem their 1.875% debentures at face value. Holders of the remaining $2.2 million of outstanding 1.875% debentures may require the Company to redeem their 1.875% debentures at face value on March 15, 2018 or March 15, 2023, or at any time before March 15, 2028, upon the occurrence of certain events. Effective as of March 22, 2013, the Company had the right at its discretion to redeem the remaining $2.2 million of outstanding 1.875% debentures for cash at any time prior to maturity. The outstanding balance at March 31, 2014, and December 31, 2013, is $2.2 million aggregate principal amount, reported as a long-term debt obligation. |
There was no amortization expense related to the issuance costs of the 1.875% debentures for the three-month period ended March 31, 2014, and for the same period of 2013 there was approximately $0.2 million of amortization expense. The interest expense on the 1.875% debentures was approximately $10,500 and $0.7 million for the three-month periods ended March 31, 2014 and 2013, respectively. The Company made cash payments of $21,000 and $1.6 million for interest on the 1.875% debentures for the three-month periods ended March 31, 2014 and March 31, 2013, respectively. |
1.75% CONVERTIBLE DEBENTURES |
In October 2012, the Company issued $396.75 million aggregate principal amount of 1.75% senior unsecured convertible debentures due October 15, 2032 (1.75% debentures). Each $1,000 principal amount of these 1.75% debentures is initially convertible, under certain circumstances and during certain periods, into 60.4961 shares (subject to customary anti-dilution adjustments) of the Company's common stock, which represents an initial conversion price of $16.53 per share. The 1.75% debentures also include an embedded conversion enhancement feature that is equivalent to including with each debenture a warrant initially exercisable for 30.2481 shares at $16.53 per share (also subject to customary anti-dilution adjustments). The Company, at its election, may settle conversions of the 1.75% debentures in cash, shares of its common stock or any combination of cash and shares of its common stock. Holders have the right to redeem their 1.75% debentures at face value plus accrued and unpaid interest on October 15 of each of 2019, 2024, 2029, and upon the occurrence of certain corporate events. The Company will have the right to redeem the 1.75% debentures at any time on or after October 20, 2019. |
The 1.75% debentures were bifurcated under U.S. GAAP into separate debt and equity components, and reflect an effective maturity (to the first optional redemption date) of seven years. The residual amount of $141.6 million recorded in equity is treated for accounting purposes as additional debt discount and accreted as an additional non-cash interest charge to earnings over the expected life. Debt and equity issuance costs totaling approximately $12.4 million were deducted from the gross proceeds of the offering of the 1.75% debentures and the debt portion is being amortized ratably over seven years. |
The 1.75% debentures have an effective interest rate of 8.50% and a stated interest rate of 1.75% with interest paid semi-annually. The balance outstanding at March 31, 2014, and December 31, 2013, was approximately $278.2 million and $274.0 million, respectively, which is net of unamortized discount of $118.6 million and $122.8 million, respectively. |
Amortization expense related to the issuance costs of the 1.75% debentures was approximately $0.3 million for the three-month periods ended March 31, 2014, and March 31, 2013, respectively. The interest expense was approximately $5.9 million and $5.6 million for the three-month periods ended March 31, 2014 and March 31, 2013, respectively. The Company made no interest payments on the 1.75% debentures during the three-month periods ended March 31, 2014, and March 31, 2013. |
EXEMPT FACILITY REVENUE BONDS |
During 2000, the Company completed a $30.0 million offering of 8.0% Exempt Facility Revenue Bonds, Series 2000 through the State of Montana Board of Investments. The bonds were issued by the State of Montana Board of Investments to finance a portion of the costs of constructing and equipping certain sewage and solid waste disposal facilities at both the Stillwater Mine and the East Boulder Mine. The bonds mature on July 1, 2020 and have a stated interest rate of 8.0% with interest paid semi-annually. Net discounted proceeds from the offering were $28.7 million, yielding an effective rate of 8.57%. The balance outstanding at March 31, 2014, and December 31, 2013, was $29.6 million, which is net of unamortized discount of $0.4 million. The Company made no interest payments on the revenue bonds for the three-month periods ended March 31, 2014 and 2013. |
ASSET-BACKED REVOLVING CREDIT FACILITY |
In December 2011, the Company signed a $100.0 million asset-backed revolving credit agreement incurring debt issuance costs of $1.1 million. In January 2012, the Company completed the syndication of this facility and simultaneously expanded its maximum line of credit to $125.0 million, incurring additional debt issuance costs of $0.2 million. Borrowings under this working capital credit facility are limited to a borrowing base equal to the sum of 85% of eligible accounts receivable and 70% of eligible inventories. Terms of the credit agreement state that the borrowings will be secured by the Company's accounts receivable, metals inventories and other accounts. The asset-backed revolving credit facility includes a single fixed-charge coverage covenant that only takes effect when less than 30% of the total borrowing capacity under the facility remains available. The facility includes a $60.0 million letter of credit sub-facility. Outstanding borrowings under the facility accrue interest at a spread over the London Interbank Offer Rate that varies from 2.25% to 2.75%, decreasing progressively as the percentage drawn under the facility increases. The Company also pays an unused capacity fee on committed but unutilized borrowing capacity available under the facility at a rate per annum of 0.375% or 0.5%, depending on utilization of the facility. |
The Company recognized $0.3 million in fees associated with the asset-backed revolving credit agreement in each of the three-month periods ended March 31, 2014 and 2013, respectively. Amortization expense related to the issuance costs of the credit agreement was less than $0.1 million for each of the three-month periods ended March 31, 2014 and 2013. As of March 31, 2014, there were no outstanding borrowings under this revolving credit facility and approximately $17.5 million in undrawn irrevocable letters of credit have been issued under this facility as collateral for sureties. |
CAPITAL LEASE OBLIGATIONS |
The Company entered into a lease agreement with General Electric Capital Corporation (GECC) covering the acquisition of a tunnel-boring machine (TBM) for use on the Blitz development adjacent to the Stillwater Mine. The transaction is structured as a capital lease with a four-year term maturing in 2016; lease payments are due quarterly in advance. The Company made cash payments of $0.5 million on its capital lease obligations in each of the three-month periods ended March 31, 2014 and 2013, respectively. The cash payments for each of the three-month periods ended March 31, 2014 and March 31, 2013 included interest of less than $0.1 million. As of March 31, 2014 and December 31, 2013, the outstanding balance under the capital lease was $4.1 million and $4.6 million, respectively. |
The following is a schedule, by year, of the future minimum lease payments for the capital lease together with the present value of the net minimum lease payments: |
|
| | | | |
(In thousands) | | |
Remaining 2014 | | $ | 1,625 | |
|
2015 | | 2,168 | |
|
2016 | | 590 | |
|
Total minimum lease payments | | $ | 4,383 | |
|
Less interest at rates ranging from 5.21% to 5.46% (before-tax) | | 259 | |
|
Net minimum lease payments | | $ | 4,124 | |
|
Less current portion | | 1,984 | |
|
Total long-term capital lease obligation | | $ | 2,140 | |
|
CAPITALIZED INTEREST |
The Company capitalizes interest incurred on its various debt instruments as a cost of specific and identified projects under development. For the three-month periods ended March 31, 2014 and 2013, the Company capitalized interest of $1.1 million and $0.8 million, respectively. Capitalized interest is recorded as a reduction to Interest expense in the Company's Consolidated Statements of Comprehensive Income. |