Debt and Other Financing Arrangements

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Long-Term Debt and Financing Arrangements

-Term Debt

A summary of our long-term debt obligations at June 30, 2019 and December 31, 2018 is set forth in the following table:

	June 30, 2019				December 31, 2018
	Principal		Carrying Amount (1)		Principal		Carrying Amount (1)
Credit Facilities
Revolver Borrowings
Due 2023	$	250	$	250	$	—	$	—
Term Loans
LIBOR plus 1.75% Term Loan A due 2019 through 2023	1,658		1,649		1,700		1,691
LIBOR plus 3.00% Term Loan B due 2019 through 2025(2)	1,692		1,626		1,700		1,629
Senior Unsecured Notes
$225 million of 5.375% Senior Notes due 2024	225		222		225		222
$500 million of 5.000% Senior Notes due 2026	500		494		500		493
Senior Secured Notes
€415 million 4.875% Euro Fixed Rate Notes due 2022	472		489		476		496
€300 million of Euribor plus 4.875% Euro Floating Rate Notes due 2024	341		345		344		349
€350 million of 5.000% Euro Fixed Rate Notes due 2024	398		422		401		427
Other debt, primarily foreign instruments	93		91		108		106
			5,588				5,413
Less - maturities classified as current			80				73
Total long-term debt			$	5,508			$	5,340

(1) Carrying amount is net of unamortized debt issuance costs and debt discounts or premiums. Total unamortized debt issuance costs were $83 million and $90 million as of June 30, 2019 and December 31, 2018. Total unamortized debt (premium) discount, net was $(43) million and $(49) million as of June 30, 2019 and December 31, 2018.

(2) As of December 31, 2018, the rate on Term Loan B was LIBOR plus 2.75%.

Term Loans

On October 1, 2018, the Company entered into a new credit agreement with JPMorgan Chase Bank, N.A., as administrative agent and other lenders (the "New Credit Facility") in connection with the Federal-Mogul Acquisition. The New Credit Facility provides $4.9 billion of total debt financing, consisting of a five-year $1.5 billion revolving credit facility, a five-year $1.7 billion term loan A facility ("Term Loan A") and a seven-year $1.7 billion term loan B facility ("Term Loan B").

Senior Notes

The Company has outstanding 5.375% senior unsecured notes due December 15, 2024 ("2024 Senior Notes") and 5.000% senior unsecured notes due July 15, 2026 ("2026 Senior Notes" and together with the 2024 Senior Notes, the "Senior Unsecured Notes"). The Company has outstanding 5.000% euro denominated fixed rate notes which are due July 15, 2024 ("5.000% Euro Fixed Rate Notes"), 4.875% euro denominated fixed rate notes due April 15, 2022 ("4.875% Euro Fixed Rate Notes"), and floating rate notes due April 15, 2024 ("Euro Floating Rate Notes", together with the 5.000% Euro Fixed Rate Notes and the 4.875% Euro Fixed Notes, the "Senior Secured Notes").

Credit Facilities

The Company had availability on its credit facilities as of June 30, 2019 as follows:

	Credit Facilities as of June 30, 2019
	Term	Available(b)
		(in billions)
Tenneco Inc. revolving credit facility (a)	2023	$	1.2
Tenneco Inc. Term Loan A	2023	—
Tenneco Inc. Term Loan B	2025	—
Subsidiaries’ credit agreements	2020	0.2
		$	1.4

^(a)  The Company is required to pay commitment fees under the revolving credit facility on the unused portion of the total commitment.

^(b)  Letters of credit reduce the available borrowings under the revolving credit facility, as of June 30, 2019 the revolving credit facility had $20 million in letters of credit outstanding.

Interest expense associated with the amortization of the debt issuance costs and original issue discounts recognized in the Company's condensed consolidated statements of income (loss) consist of the following:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Amortization of debt issuance fees	$	4	$	1	$	9	$	2

Included in the table above, is the amortization of debt issuance costs on the revolver, which are $20 million at June 30, 2019 and are recorded in "Other assets" in the condensed consolidated balance sheets. In addition, there was a $3 million and $6 million reduction to interest expense during the three and six months ended June 30, 2019 related to the accretion of the debt premium on the Senior Secured Notes.

New Credit Facility — Other Terms and Conditions — The New Credit Facility also contains two financial maintenance covenants for the revolving credit facility and the Term Loan A facility including a requirement to have a consolidated net leverage ratio (as defined in the New Credit Facility) as of the end of each fiscal quarter of not greater than 4.0 to 1 through September 30, 2019, 3.75 to 1 through September 30, 2020 and 3.5 to 1 thereafter; and a requirement to maintain a consolidated interest coverage ratio (as defined in the New Credit Facility) for any period of four consecutive fiscal quarters of not less than 2.75 to 1.  

Senior Unsecured Notes and Senior Secured Notes — Other Terms and Conditions — The Senior Unsecured Notes and Senior Secured Notes contain covenants that will, among other things, limit the Company's ability to create liens and enter into sale and leaseback transactions. In addition, the Senior Secured Notes and 2024 Senior Unsecured Notes also require that, as a condition precedent to incurring certain types of indebtedness not otherwise permitted, the Company's consolidated fixed

charge coverage ratio, as calculated on a pro forma basis, be greater than 2.00, as well as containing restrictions on its operations, including limitations on: (i) incurring additional indebtedness; (ii) paying dividends; (iii) distributions and stock repurchases; (iv) investments; (v) asset sales and (vi) mergers and consolidations.

Subject to limited exceptions, all of the Company's existing and future material domestic wholly owned subsidiaries fully and unconditionally guarantee its Senior Unsecured Notes and Senior Secured Notes on a joint and several basis. There are no significant restrictions on the ability of the subsidiaries that have guaranteed the Company's Senior Notes to make distributions to the Company.

As of June 30, 2019, the Company was in compliance with all of its financial covenants.

Accounts Receivable Securitization and Factoring

On-Balance Sheet Arrangements — The Company has securitization programs for some of its accounts receivables, with limited recourse provisions. Borrowings on these securitization programs, which are recorded in short-term debt, at June 30, 2019 and December 31, 2018 are as follows:

	June 30, 2019		December 31, 2018
Borrowings on securitization programs	$	4	$	6

Off-Balance Sheet Arrangements — In the Company's European and U.S. accounts receivable factoring programs, accounts receivables are transferred in their entirety to the acquiring entities and are accounted for as a sale. The fair value of assets received as proceeds in exchange for the transfer of accounts receivable under these factoring programs approximates the fair value of such receivables. Certain programs in Europe have deferred purchase price arrangements with the banks.

The Company is the servicer of the receivables under some of these arrangements and is responsible for performing all accounts receivable administration functions. Where the Company receives a fee to service and monitor these transferred accounts receivables, such fees are sufficient to offset the costs and as such, a servicing asset or liability is not recorded as a result of such activities.

In the U.S and Canada, the Company participates in supply chain financing programs with certain of the Company's aftermarket customers through a drafting program.

The amounts outstanding for these factoring and drafting arrangements as of June 30, 2019 and December 31, 2018 are as follows:

	June 30, 2019		December 31, 2018
	(in billions)
Accounts receivable outstanding and derecognized	$	1.1	$	1.0

The deferred purchase price receivable as of June 30, 2019 and December 31, 2018 is as follows:

	June 30, 2019		December 31, 2018
Deferred purchase price receivable	$	52	$	154

Proceeds from the factoring of accounts receivable qualifying as sales are as follows:

	Three months ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
	(in billions)
Proceeds from factoring qualifying as sales	$	1.3	$	0.7	$	2.5	$	1.5

Financing charges associated with the factoring of receivables are as follows:

	Three months ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Financing charges on sale of receivables(a)	$	6	$	2	$	14	$	5
(a) Amount is included in "Interest expense" in the condensed consolidated statements of income (loss).

If the Company were not able to factor receivables or sell drafts under either of these programs, its borrowings under its revolving credit agreement might increase. These programs provide the Company with access to cash at costs that are generally favorable to alternative sources of financing and allow the Company to reduce borrowings under its revolving credit agreement.