Debt and Other Financing Arrangements

6 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

Debt and Other Financing Arrangements

9. Debt and Other Financing Arrangements

Long-Term Debt

A summary of the Company’s long-term debt obligations at June 30, 2021 and December 31, 2020 is set forth in the following table:

	June 30, 2021				December 31, 2020
	Principal		Carrying Amount (a)		Principal		Carrying Amount (a)
Credit Facilities
Revolver Borrowings
Due 2023	$	—	$	—	$	—	$	—
Term Loans
LIBOR plus 2.00% Term Loan A due 2019 through 2023(b)	1,466		1,458		1,530		1,520
LIBOR plus 3.00% Term Loan B due 2019 through 2025	1,658		1,609		1,666		1,612
Senior Unsecured Notes
$225 million of 5.375% Senior Notes due 2024	225		223		225		223
$500 million of 5.000% Senior Notes due 2026	500		495		500		494
Senior Secured Notes
€300 million of Euribor plus 4.875% Euro Floating Rate Notes due 2024(c)	—		—		366		370
€350 million of 5.000% Euro Fixed Rate Notes due 2024(c)	—		—		428		445
$500 million of 7.875% Senior Secured Notes due 2029	500		490		500		489
$800 million of 5.125% Senior Secured Notes due 2029(d)	800		786		—		—
Other debt, primarily foreign instruments	28		27		24		23
			5,088				5,176
Less - maturities classified as current			7				5
Total long-term debt			$	5,081			$	5,171

(a)Carrying amount is net of unamortized debt issuance costs and debt discounts or premiums. Total unamortized debt issuance costs were $87 million and $82 million at June 30, 2021 and December 31, 2020. Total unamortized debt (premium) discount, net was $1 million and $(20) million at June 30, 2021 and December 31, 2020.

(b)The interest rate on Term Loan A at December 31, 2020 was LIBOR plus 2.50%.

(c)The Company satisfied and discharged all of its 4.875% Euro Floating Rate Notes due 2024 and 5.000% Euro Fixed Rate Notes due 2024 on March 17, 2021.

(d)On March 17, 2021, the Company issued $800 million aggregate principal amount of 5.125% senior secured notes due April 15, 2029. Interest payable semiannually on April 15 and October 15 of each year beginning on October 15, 2021 with principal due at maturity.

The Company has a senior credit facility under the credit agreement dated October 1, 2018 (as amended, restated, supplemented or otherwise modified, the “New Credit Facility”) that 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”). 

Short-Term Debt

The Company’s short-term debt at June 30, 2021 and December 31, 2020 consists of the following:

	June 30, 2021		December 31, 2020
Maturities classified as current	$	7	$	5
Short-term borrowings(a)	119		157
Total short-term debt	$	126	$	162

(a)Includes borrowings under both committed credit facilities and uncommitted lines of credit and similar arrangements.

Credit Facilities

Financing Arrangements

The table below shows the Company’s borrowing capacity on committed credit facilities at June 30, 2021 (in billions):

	June 30, 2021
	Term	Available(b)
Tenneco Inc. revolving credit facility(a)	2023	$	1.5
Tenneco Inc. Term Loan A	2023	—
Tenneco Inc. Term Loan B	2025	—
Subsidiaries’ credit agreements	2022 - 2028	—
		$	1.5

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

(b)At June 30, 2021, the Company had $28 million of outstanding letters of credit under the revolving credit facility, which reduces the available borrowings under the revolving credit facility. The Company also had $77 million of outstanding letters of credit under uncommitted facilities at June 30, 2021.

At June 30, 2021, the Company had liquidity of $2.2 billion comprised of $719 million of cash and $1.5 billion undrawn on its revolving credit facility. The Company had no outstanding borrowings on its revolving credit facility at June 30, 2021.

At June 30, 2021 and December 31, 2020, the unamortized debt issuance costs related to the revolver of $14 million and $17 million are included in “Other assets” in the condensed consolidated balance sheets.

Credit Facility

New Credit Facility — Interest Rates

At June 30, 2021, the interest rate on borrowings under the revolving credit facility and the Term Loan A facility was LIBOR plus 2.00% and will remain at LIBOR plus 2.00% for each relevant period for which the Company's consolidated net leverage ratio (as defined in the New Credit Facility) is less than 4.5 to 1 and greater than 3.0 to 1. The interest rate on borrowings under the revolving credit facility and the Term Loan A facility are subject to step downs in accordance with the credit agreement.

New Credit Facility — Other Terms and Conditions

Further information on interest rates, fees, and other terms and conditions of the New Credit Facility is included in the Company's 2020 Form 10-K.

At June 30, 2021, the Company was in compliance with all the financial covenants of the New Credit Facility.

Senior Notes

On March 3, 2021, the Company provided notice of its intention to redeem all of the outstanding 5.000% euro denominated senior secured notes due July 15, 2024 (the “2024 Fixed Rate Secured Notes”) and all of the outstanding floating rate euro denominated senior secured notes due April 15, 2024 (the “2024 Floating Rate Secured Notes” and, together with the 2024 Fixed Rate Secured Notes, the “2024 Secured Notes”). On March 17, 2021, the Company using the net proceeds of the offering of 5.125% Senior Secured Notes, together with cash on hand, satisfied and discharged each of the indentures governing the 2024 Secured Notes in accordance with their terms. As a result, the Company recorded a gain on extinguishment of debt of $8 million for the six months ended June 30, 2021.

Further information on the terms and conditions of the Senior Unsecured Notes and Senior Secured Notes is included in the Company's 2020 Form 10-K.

At June 30, 2021, the Company was in compliance with all of its financial covenants under the indentures governing the Senior Unsecured Notes and Senior Secured Notes.

Other Debt

Other debt consists primarily of subsidiary debt.

Factoring Arrangements

In the Company'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. Some of these programs 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.

At June 30, 2021 and December 31, 2020, the amount of accounts receivable outstanding and derecognized for factoring arrangements was $1.0 billion and $1.0 billion, of which $0.4 billion and $0.4 billion relate to accounts receivable where the Company has continuing involvement. In addition, the deferred purchase price receivable was $62 million and $51 million at June 30, 2021 and December 31, 2020.

For the three months ended June 30, 2021 and 2020, proceeds from the factoring of accounts receivable qualifying as sales were $1.3 billion and $0.7 billion, of which $1.0 billion and $0.5 billion were received on accounts receivable where the Company has continuing involvement. For the six months ended June 30, 2021 and 2020, proceeds from the factoring of accounts receivable qualifying as sales were $2.6 billion and $1.9 billion, of which $2.1 billion and $1.6 billion were received on accounts receivable where the Company has continuing involvement.

The Company’s financing charges associated with the factoring of receivables, which are included in “Interest expense” in the condensed consolidated statements of income (loss), was $5 million and $4 million for the three months ended June 30, 2021 and 2020, and $9 million and $10 million for the six months ended June 30, 2021 and 2020.

If the Company were not able to factor receivables under 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.