Debt including Capital Lease Obligations

The carrying values of our debt represent amortized cost and are summarized below with estimated fair values:



	September 30, 2014					December 31, 2013					September 30, 2013
	Carrying Value			Estimated Fair Value¹		Carrying Value			Estimated Fair Value¹		Carrying Value			Estimated Fair Value¹
(In thousands)	Carrying Value			Estimated Fair Value¹		Carrying Value			Estimated Fair Value¹		Carrying Value			Estimated Fair Value¹
7.875% Senior Secured Notes due 2021	$	412,403		$	449,000	$	422,174		$	459,000	$	422,100		$	453,000
4.25% Convertible Senior Notes due 2016	173,194			200,000		164,050			194,000		161,182			196,000
ABL Term Loan	5,250			5,000		6,375			6,000		6,750			6,000
Capital lease obligations²	42,142			42,000		39,025			39,000		32,171			32,000
Other debt	6,541			6,000		—			—		—			—
Less current portion	(4,648		)			(2,271		)			(2,191		)
Total long-term debt and capital lease obligations	$	634,882				$	629,353				$	620,012

The fair value of the senior notes is based on observable inputs, which include quoted prices for similar assets or liabilities in an active market and market-corroborated inputs (Level 2). All other debt may be traded on the secondary loan market, and the fair value is based on either the last available trading price, if recent, or trading prices of comparable debt (Level 3). See Note 8 for further discussion of fair value.


²	Capital lease obligations include the borrowings for the salad production and warehousing facility in the Midwest. See further description of the build-to-suit lease below.

7.875% SENIOR SECURED NOTES

In February 2013, Chiquita Brands International, Inc. ("CBII") and its main operating subsidiary, Chiquita Brands L.L.C. ("CBL"), completed the offering of $425 million of 7.875% senior secured notes due February 1, 2021 ("7.875% Notes"). The notes were issued at 99.274% of par, resulting in a recorded discount that will be amortized over the life of the 7.875% Notes to reflect the effective interest rate of 8.0%. The 7.875% Notes were registered with the United States Securities and Exchange Commission through an exchange offer on January 6, 2014, which was completed on February 4, 2014. The 7.875% Notes bear interest of 7.875% per year (payable semi-annually in arrears on February 1 and August 1 of each year). On January 31, 2014, we redeemed $10 million of the 7.875% Notes at 103% of the principal amount (plus interest to the redemption date), incurring less than $1 million of expense in 2014 for call premiums and deferred financing fee write-offs.

On or before February 1, 2016, CBII and CBL may redeem on one or more occasions up to 35% of the aggregate principal amounts with cash proceeds from certain equity sales at a redemption price of 107.875% of the principal amount plus accrued interest, provided that at least 65% of the original aggregate principal amount of the 7.875% Notes remains outstanding after each such redemption. Also, on or before February 5, 2016, CBII and CBL may redeem a portion of the 7.875% Notes at a redemption price of 103% of the principal amount plus accrued interest, provided that no more than $42.5 million aggregate principal amount may be redeemed each year. CBII and CBL may also redeem the 7.875% Notes as follows:



If redeemed during the 12-month period commencing February 1,		Redemption Price
2016		105.906%
2017		103.938%
2018		101.969%
2019 and thereafter		100.000%

Upon a change of control of CBII, CBII and CBL (or a third party on their behalf) will be required to make an offer to purchase the notes at 101% of their principal amount, plus accrued interest.

4.25% CONVERTIBLE SENIOR NOTES

Our $200 million of 4.25% Convertible Senior Notes due 2016 ("Convertible Notes") are convertible at an initial conversion rate of 44.5524 shares of common stock per $1,000 in principal amount, equivalent to an initial conversion price of approximately $22.45 per share of common stock. The conversion rate is subject to adjustment based on certain dilutive events, including stock splits, stock dividends and other distributions (including cash dividends) in respect of the common stock. Holders of the Convertible Notes may tender their notes for conversion between May 15 and August 14, 2016, in multiples of $1,000 in principal amount, without limitation. Prior to May 15, 2016, holders of the Convertible Notes may tender the notes for conversion only under certain circumstances, in accordance with their terms.

The carrying amounts of the debt and equity components of the Convertible Notes are as follows:



(In thousands)	September 30, 2014			December 31, 2013			September 30, 2013
Principal amount of debt component¹	$	200,000		$	200,000		$	200,000
Unamortized discount	(26,806		)	(35,950		)	(38,818		)
Net carrying amount of debt component	$	173,194		$	164,050		$	161,182
Equity component	$	84,904		$	84,904		$	84,904
Issuance costs and income taxes	(3,210		)	(3,210		)	(3,210		)
Equity component, net of issuance costs and income taxes	$	81,694		$	81,694		$	81,694


¹	As of September 30, 2014, December 31, 2013 and September 30, 2013, the Convertible Notes' "if-converted" value did not exceed their principal amount because our common stock price was below the conversion price of the Convertible Notes.

The interest expense related to the Convertible Notes was as follows:



	Quarter Ended September 30,				Nine Months Ended September 30,
(In thousands)	2014		2013		2014		2013
4.25% coupon interest	$	2,125	$	2,125	$	6,375	$	6,375
Amortization of deferred financing fees	117		117		352		352
Amortization of discount on the debt component	3,141		2,782		9,144		8,100
Total interest expense related to the Convertible Notes	$	5,383	$	5,024	$	15,871	$	14,827

ASSET-BASED LENDING FACILITY

CBII and CBL also entered into a 5-year secured asset-based lending facility ("ABL Facility") concurrently with the closing of the 7.875% Notes offering on February 5, 2013. The ABL Facility consists of a revolver (the "ABL Revolver") and a $7.5 million term loan (the "ABL Term Loan"). The ABL Facility matures at the earlier of February 5, 2018 or 60 days prior to the maturity of the 4.25% Convertible Senior Notes due August 15, 2016, unless such notes have been satisfactorily refinanced. The ABL Term Loan requires annual repayments of approximately $2 million.

The ABL Facility has a maximum borrowing capacity of $150 million, with the ABL Revolver subject to a borrowing base calculation based on specified percentages of domestic receivables, certain inventory and certain domestic machinery and equipment.

At September 30, 2014, there were no borrowings under the ABL Revolver, under which $84 million was available after $25 million was used to support letters of credit.

Loans under the ABL Facility bear interest at:


•	A rate equal to LIBOR plus a margin of from 1.75% to 2.25%, or Base Rate plus a margin of from 0.25% to 0.75%, determined based on levels of borrowing availability reset each fiscal quarter;


•	In the case of the Fixed Asset Sub-Line, a rate equal to LIBOR plus a margin from 2.25% to 2.75%, or Base Rate plus a margin of from 0.75% to 1.25%, determined based on levels of borrowing availability reset each fiscal quarter; and


•	In the case of the ABL Term Loan, a rate equal to LIBOR plus a margin from 2.75% to 3.25%, or Base Rate plus a margin of from 1.25% to 1.75%, determined based on levels of borrowing availability reset each fiscal quarter.

At September 30, 2014, the weighted average interest rate for the ABL Facility was LIBOR plus 2.75%, or 2.91%.

The ABL Facility contains a fixed charge coverage ratio covenant that did not apply at September 30, 2014 because it is only applicable when excess availability (as defined under such facility) is less than $20 million. The ABL Facility also contains a covenant requiring CBII and its subsidiaries to maintain substantially all of its cash in accounts that are subject to the control of the collateral agent under the ABL Facility that did not apply at September 30, 2014 because it is only applicable when (a) an event of default under the facility occurs and is continuing or (b) excess availability (as defined under such facility) is less than $25 million.

The ABL facility also contains other customary affirmative and negative covenants, including limitations on CBII and its subsidiaries' ability to incur indebtedness, create or permit the existence of liens over their assets, engage in certain mergers, asset sales and liquidations, prepay certain indebtedness, pay dividends and other "restricted payments," and engage in transactions with their affiliates, in each case subject to customary exceptions. At September 30, 2014, we were in compliance with the ABL and its other agreements and expect to remain in compliance for at least the next twelve months.

BUILD-TO-SUIT LEASE FOR MIDWEST SALAD PLANT CONSOLIDATION

In June 2012, we entered into a 20-year lease agreement for a salad production and warehousing facility in the Midwest that replaced three existing facilities in the region. The lease agreement contains two 5-year extension periods. The plant was phased into service during 2013, and the construction costs were finalized on March 31, 2014 resulting in an interest rate of 6.3% to calculate the capital lease liability and future payments. Lease payments will increase annually based on CPI. The total liability related to this facility was $42 million, $38 million and $38 million at September 30, 2014, December 31, 2013 and September 30, 2013, respectively, of which approximately $1 million was current at each of those dates. At September 30, 2014 and December 31, 2013, this liability was included as a capital lease obligation on the Condensed Consolidated Balance Sheets. At September 30, 2013, $31 million was included as a capital lease obligation corresponding to the portion of the leased facility that was placed into service and $1 million and $6 million obligations corresponding to the construction in progress of the leased facility were included in "Accrued liabilities" and "Other liabilities", respectively. Though the construction costs were financed by the lessor, we acted as the construction agent and were responsible for all construction activity during the construction period because of the specialized nature of the facility. As a result, we were treated as the owner for accounting purposes during the construction period.

OTHER DEBT

In the first quarter of 2014, we purchased a group of banana farms in Honduras that were adjacent to farms that we already owned. The purchase included approximately 700 hectares of land, of which nearly 450 hectares are in production, as well as related buildings and equipment. The purchase price was $10 million, of which $3 million was paid at closing and is included in "Investing: Other, net" in the Condensed Consolidated Statement of Cash Flows. The remaining $7 million was financed by the sellers and is payable in annual installments over four years. The agreement did not specify an interest rate, and we calculated the debt balance using the effective rate method and an estimated interest rate of 8%.