American Home Shield 2015 Annual Report Download - page 98

Table of Contents
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In accordance with accounting standards for derivative instruments and hedging activities, and as further described in
Note 18 to the consolidated financial statements, these interest rate swap agreements are classified as cash flow hedges, and, as such,
the hedging instruments are recorded on the consolidated statements of financial position as either an asset or liability at fair value,
with the effective portion of the changes in fair value attributable to the hedged risks recorded in accumulated other comprehensive
income (loss).
Revolving Credit Facility
On July 1, 2014, in connection with the Company’s initial public offering, the Company terminated the then-existing
revolving credit facility and entered into a $300 million Revolving Credit Facility. The maturity date for the Revolving Credit Facility
is July 1, 2019. The Revolving Credit Facility provides for senior secured revolving loans and stand-by and other letters of credit. The
Revolving Credit Facility limits outstanding letters of credit to $225 million. As of December 31, 2015, there were $133 million of
letters of credit outstanding and $167 million of available borrowing capacity under the Revolving Credit Facility.
The Revolving Credit Facility and the guarantees thereof are secured by the same collateral securing the Term Loan Facility,
on a pari passu basis with the security interests created in the same collateral securing the Term Loan Facility.
The interest rates applicable to the loans under the Revolving Credit Facility are based on a fluctuating rate of interest
measured by reference to either, at The Company’s option, (i) an adjusted LIBOR plus a margin of 3.25 percent per annum or (ii) an
alternate base rate plus a margin of 2.25 percent per annum.
2020 Notes
On July 16, 2014, the Company used proceeds from the Company’s initial public offering to redeem $210 million in
aggregate principal amount of its 8% 2020 Notes and $263 million in aggregate principal amount of its 7% 2020 Notes. In connection
with the partial redemption of the 8% 2020 Notes and 7% 2020 Notes, the Company was required to pay a pre-payment premium of
$17 million and $18 million, respectively, and accrued interest of $7 million and $8 million, respectively. Additionally, in connection
with the partial redemption of the 2020 Notes and the repayment of the Old Term Facilities, the Company recorded a loss on
extinguishment of debt of $65 million in the year ended December 31, 2014, which includes the pre-payment premiums on the 8%
2020 Notes and 7% 2020 Notes of $17 million and $18 million, respectively, and the write-off of $30 million of debt issuance costs.
On February 17, 2015, the Company redeemed $190 million in aggregate principal amount of its 8% 2020 Notes at a
redemption price of 106.0% of the principal amount using available cash. In connection with the partial redemption, the Company
recorded a loss on extinguishment of debt of $13 million in the year ended December 31, 2015, which includes a pre-payment
premium of $11 million and the write-off of $2 million of debt issuance costs.
On April 1, 2015, the Company used the net proceeds from the April Incremental Term Loans, together with cash on hand, to
redeem the remaining outstanding $200 million in aggregate principal amount of its 8% 2020 Notes at a redemption price of 106.0%
of the principal amount. In connection with the redemption, the Company recorded a loss on extinguishment of debt of $14 million in
the year ended December 31, 2015, which includes a pre-payment premium of $12 million and the write-off of $2 million of debt
issuance costs.
On August 17, 2015, the Company used the net proceeds from the August Incremental Term Loans, together with cash on
hand, to redeem the remaining outstanding $488 million in aggregate principal amount of the 7% 2020 Notes at a redemption price of
105.25% of the principal amount. In connection with the redemption, the Company recorded a loss on extinguishment of debt of $31
million in the year ended December 31, 2015, which includes a pre-payment premium of $25 million and the write-off of $6 million of
debt issuance costs.
Other
The agreements governing the Term Loan Facility and the Revolving Credit Facility contain certain covenants that, among
other things, limit or restrict the incurrence of additional indebtedness, liens, sales of assets, certain payments (including dividends)
and transactions with affiliates, subject to certain exceptions. The Company was in compliance with the covenants under these
agreements at December 31, 2015.
As of December 31, 2015, future scheduled long-term debt payments are $54 million, $66 million, $121 million, $38 million
and $32 million for the years ended December 31, 2016, 2017, 2018, 2019 and 2020, respectively. Certain of the Company’s assets,
including vehicles, equipment and a call center facility, are leased under capital leases with $51 million in remaining lease obligations
as of December 31, 2015. The long-term debt payments above include future capital lease payments of approximately $18 million in
2016, $15 million in 2017, $10 million in 2018, $6 million in 2019, and $2 million in 2020.
96 2015 Annual Report