Amtrak 2015 Annual Report Download - page 27

National Railroad Passenger Corporation and Subsidiaries (Amtrak)
Notes to Consolidated Financial Statements (continued)
6. Mortgages and Debt (continued)
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terms of the agreement for Term Loan A, the Company incurs interest at a rate of LIBOR plus 1.0%. At the
time that Term Loan A was entered into, the Company entered into an interest rate swap agreement, the impact
of which made the effective interest rate on Term Loan A 2.76%. Under the agreement for Term Loan B, the
Company incurs interest at a rate of 3.36%. The Company is repaying the two term loans in quarterly
installments beginning September 20, 2014 and continuing through June 20, 2021 in the case of Term Loan
A and June 20, 2024 in the case of Term Loan B. The outstanding balance under Term Loan A was $108.6
million and $125.8 million as of September 30, 2015 and 2014, respectively. The outstanding balance under
Term Loan B was $62.5 million and $68.5 million as of September 30, 2015 and 2014, respectively.
RRIF Loan
On June 21, 2011, the Company entered into a $562.9 million RRIF loan financing agreement with the FRA
and a related Master Lease Agreement with Wells Fargo Bank Northwest (Owner Trustee), to finance the
purchase of 70 new electric locomotives, related spare parts, and improvements to existing maintenance
facilities to service the new locomotives. Amtrak’s obligations are collateralized by the locomotives, spare
parts, and certain facilities expected to be constructed with loan proceeds. The Owner Trustee’s role in the
Master Lease Agreement is as a trustee for the benefit of the FRA. Amtrak is repaying the FRA advances
(plus interest thereon) via quarterly lease payments under the Master Lease Agreement, beginning on
September 15, 2014. Payments will continue, on a quarterly basis, for a full 25-year period at an amount
sufficient to fully pay interest and amortize principal over the term. Upon acceptance of each locomotive,
the associated portion of the obligation under the RRIF loan converts to a capital lease for accounting purposes
(see Note 7).
During the years ended September 30, 2015 and 2014, the Company received new advances under the RRIF
loan of $94.8 million and $60.6 million, respectively. As of September 30, 2015 and 2014, the total outstanding
balance under the RRIF loan (debt and capital lease obligations) was $429.9 million and $344.9 million,
respectively. All advances under the RRIF loan bear interest at an interest rate of 4.04% per annum. Of the
total amount outstanding on September 30, 2015, $71.7 million was classified as a debt obligation and $358.2
million was classified as a capital lease obligation.
The Company incurred interest charges on the advances classified as debt obligations of $6.5 million and
$11.7 million for the years ended September 30, 2015 and 2014, respectively, which were capitalized and
recorded in “Construction-in-progress” in the Consolidated Balance Sheets.
Amtrak pays a 4.424% credit risk premium on all amounts advanced under the RRIF loan program. The
credit risk premium may be returned by the FRA to Amtrak after the repayment of the RRIF loan. As of
September 30, 2015 and 2014, the Company had paid cumulative credit risk premiums of $18.6 million and
$14.4 million, respectively. The credit risk premium balance at September 30, 2015 is offset in part against
the debt balance and in part against the capital lease obligation in the Consolidated Balance Sheets and is
being amortized over the term of the RRIF loan using the effective interest method. The effective interest
rate of the RRIF loan as of September 30, 2015 is 4.46% and will vary over time because of the additional
credit risk premium with each draw. The amortization of the credit risk premium allocated to debt is capitalized
along with interest expense as part of “Construction-in-progress” in the Consolidated Balance Sheets.