Debt including Capital Lease Obligations

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



	June 30, 2015					December 31, 2014					June 30, 2014
	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	$	190,277		$	205,000	$	412,483		$	447,000	$	412,325		$	455,000
4.25% Convertible Senior Notes due 2016	45,002			45,000		176,431			200,000		170,053			200,000
2013 ABL Term Loan	—			—		4,875			4,800		5,625			5,000
Capital lease obligations²	40,970			40,900		41,891			41,800		42,558			42,000
Other debt	4,971			4,900		6,541			6,500		6,541			6,000
Less current portion	(3,263		)			(4,703		)			(4,610		)
Total long-term debt and capital lease obligations	$	277,957				$	637,518				$	632,492

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 21, 2015, we redeemed $139 million of the 7.875% Notes at 107.875% of the principal amount (plus accrued and unpaid interest) recording a loss on debt extinguishment of $14 million related to premium and deferred financing costs write-offs. On January 23, 2015, we redeemed an additional $43 million of the 7.875% Notes at 103% of the principle amount (plus accrued and unpaid interest) recording a loss on debt extinguishment of $2 million related to premium and deferred financing costs. On February 6, 2015, we redeemed an additional $43 million of the 7.875% Notes at 103% of the principle amount (plus accrued and unpaid interest) recording a loss on debt extinguishment of $2 million related to premium and deferred financing costs.

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) was required to make an offer to purchase the notes at 101% of their principal amount, plus accrued interest. This offer was made but no notes were tendered.

4.25% CONVERTIBLE SENIOR NOTES

Our $200 million of 4.25% Convertible Senior Notes due 2016 ("Convertible Notes") were previously 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 was 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 could have tendered the notes for conversion only under certain circumstances, in accordance with their terms.

The change in control that occurred on January 6, 2015 constituted a Fundamental Change under the Convertible Notes indenture, which required us to offer to repurchase the Convertible Notes at a price of 100% of the principal amount of the Notes to be repurchased. The offer was extended on January 14, 2015 to holders of record as of February 1, 2015, with payment on February 15, 2015. Because the payment date was the same date as the next regularly scheduled interest payment, holders received the regularly scheduled interest payment and no additional accrued interest. Holders of $151 million principal amount ($138 million carrying value) of Convertible Notes accepted this offer, after which $49 million of Convertible Notes remain outstanding and will continue to accrue interest until maturity. Early repayment resulted in a $17 million loss primarily due to the remaining unamortized discount on the Convertible Notes at the time of repurchase and was recorded in February 2015. See further information regarding the change in control in Note 2.

The carrying amounts of the debt component of the Convertible Notes are as follows:



(In thousands)	June 30, 2015			December 31, 2014			June 30, 2014
Principal amount of debt component¹	$	49,071		$	200,000		$	200,000
Unamortized discount	(4,069		)	(23,569		)	(29,947		)
Net carrying amount of debt component	$	45,002		$	176,431		$	170,053


¹	As of December 31, 2014 and June 30, 2014, 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 June 30, 2015 principal amount was reduced due to the repurchased Convertible Notes during the first quarter of 2015. See above for further discussion.

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



	Quarter Ended June 30,				Six Months Ended June 30,
(In thousands)	2015		2014		2015		2014
4.25% coupon interest	$	522	$	2,125	$	1,845	$	4,250
Amortization of deferred financing fees	28		117		86		235
Amortization of discount on the debt component	844		3,046		2,935		6,003
Total interest expense related to the Convertible Notes	$	1,394	$	5,288	$	4,866	$	10,488

RELATED PARTY LOAN

In connection with the partial extinguishment of the 7.875% Notes and the Convertible Notes as described above, CBII entered into a related party loan that totaled $238 million with its shareholder Chiquita US, as further discussed in Note 16.

ASSET-BASED LENDING FACILITY

On February 5, 2015 we replaced our existing Asset Based Lending Facility ("2013 ABL") with a new 5-year, $150 million Asset Based Lending Facility ("2015 ABL"). Existing cash was used to repay the $5 million outstanding term loan ("2013 ABL Term Loan") balance under the 2013 ABL and to pay the $3 million of financing fees associated with the 2015 ABL. Revolving availability under the 2015 ABL is based on a borrowing base calculation based on specified advance rates against the value of domestic accounts receivable, certain inventory and certain domestic machinery and equipment, with the potential for additional advances against foreign receivables. The borrowing base includes up to $19.55 million in borrowing capacity based on specified advance rates against the value of certain domestic machinery and equipment (the "Fixed Asset Sub-Line"), which Fixed Asset Sub-Line contains a re-load feature to potentially increase the sub-line to $50 million. The 2015 ABL matures on February 5, 2020. Loans under the 2015 ABL bear interest at a rate equal to LIBOR plus a margin of 1.25% to 1.75%, or Base Rate plus a margin of 0.25% to 0.75%, determined based on levels of borrowing availability reset each fiscal quarter. At June 30, 2015, the weighted average interest rate for the 2015 ABL was LIBOR plus 1.25%, or 1.44%.

Obligations under the 2015 ABL are secured by a first-priority security interest in present and future domestic receivables, inventory, equipment, and substantially all other domestic assets that are not under the first-priority security interest of the 7.875% Notes, all subject to certain exceptions and permitted liens and by a second-priority interest in the existing and after acquired material domestic real estate, certain intellectual property and a pledge of 100% of the stock of substantially all of CBII's and guarantors' domestic subsidiaries and up to 65% of the stock of certain foreign subsidiaries held by CBII, CBL and the guarantors, and proceeds relating thereto.

Under the 2015 ABL, CBL and non-de minimis domestic subsidiaries are borrowers. The facility is guaranteed on a full and unconditional basis by CBII and limited domestic subsidiaries of CBII, with the potential for additional guarantees or borrowers by foreign subsidiaries of CBII.

The 2015 ABL contains a fixed charge coverage ratio covenant which only becomes applicable when availability (as defined under such facility) is less than the greater of (i) 10% of the line cap (established under such facility) and (ii) $10 million. The 2015 ABL also contains a covenant requiring CBII and its subsidiaries to maintain substantially all its cash in accounts that are subject to the control of the collateral agent under the 2015 ABL, which only becomes applicable when (a) one of certain specified event of defaults under the facility occurs and is continuing or (b) availability (as defined under such facility) is less than the greater of (i) 10% of the line cap (as defined under such facility) or (ii) $10 million, in either case (i) or (ii) for five consecutive business days. The 2015 ABL also contains other customary affirmative and negative covenants, including limitations of our ability to make distributions and pay dividends.

At June 30, 2015, we had no borrowings under the 2015 ABL. We had $93 million of availability under the 2015 ABL after $25 million was used to support letters of credit.

At June 30, 2015, we were in compliance with the 2015 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. As of April 1, 2015 an interest rate of 6.4% is used to calculate the capital lease liability and future payments. Lease payments increase annually based on CPI. The total liability related to this facility was $41 million, $41 million and $42 million at June 30, 2015, December 31, 2014 and June 30, 2014, respectively, of which approximately $1 million was current at each of those dates.

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%.