DEBT:

The Company’s debt and capital lease obligations related to continuing operations at September 30, 2012 and December 31, 2011 consisted of (in thousands):


	September 30,			December 31,
	2012			2011

$925 Million Credit Facility, interest at LIBOR plus 2.25% or bank’s base rate plus 1.25%, maturing August 1, 2015	$	665,000		$	600,000
Convertible Senior Notes, interest at 3.75%, maturing October 1, 2014, net of unamortized discount of $ 30,554 and $ 40,754		329,446			319,246
Senior Notes, interest at 6.75%, maturing November 15, 2014		152,180			152,180
Capital lease obligations		1,835			2,399

Total debt		1,148,461			1,073,825
Less amounts due within one year		(99,537	)		(755	)

Total long-term debt	$	1,048,924		$	1,073,070

The above increase in amounts due within one year results from the Convertible Notes meeting a condition for convertibility as of September 30, 2012, but not as of December 31, 2011. As of September 30, 2012, the Company was in compliance with all of its covenants related to its debt.

$925 Million Credit Facility

On October 1, 2012, in connection with the Merger, the Company entered into a Second Amendment to Third Amended and Restated Credit Agreement (the “Amendment”) by and among the Company, as parent guarantor, RHP Hotel Properties, LP (a wholly-owned subsidiary of the Company), as borrower, certain subsidiaries of the Company party thereto, as guarantors, Bank of America, N.A, as administrative agent and the other lenders party thereto, which amends the Third Amended and Restated Credit Agreement dated as of August 1, 2011, among the Company, as borrower, certain subsidiaries of the Company party thereto, as guarantors, Bank of America, N.A., as administrative agent and the other lenders party thereto (the “$925 million credit facility”). Under the Amendment, the required lenders have agreed that the REIT conversion, including, but not limited to, the Merger and the Marriott sale transaction will not constitute a default under the $925 million credit facility. The amendment, among other things, (i) permits dividends to the extent permitted by the indenture for the Company’s 6.75% senior notes, and, if such indenture is terminated, to the extent necessary for the Company to maintain REIT status, (ii) allows the Company’s subsidiaries to lease its hotel properties, and (iii) updates the facility generally to permit the Company to restructure and operate its business as a REIT.

Convertible Senior Notes

In 2009, the Company issued $360.0 million of the Convertible Notes. The Convertible Notes are convertible, under certain circumstances as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, at the holder’s option, into shares of the Company’s common stock, at an initial conversion rate of 36.6972 shares of common stock per $1,000 principal amount of the Convertible Notes, which is equivalent to an initial conversion price of approximately $27.25 per share. The Company may elect, at its option, to deliver shares of its common stock, cash or a combination of cash and shares of its common stock in satisfaction of its obligations upon conversion of the Convertible Notes. See Note 16 for further disclosure.

Based on the Company’s stock price during the three months ended September 30, 2012, a condition permitting conversion (as defined in the indenture governing the Convertible Notes) had been satisfied, and thus the Convertible Notes are currently convertible through December 31, 2012. At this time, the Company has not processed any of the Convertible Notes for conversion. Based on the Company’s borrowing capacity under its $925 million credit facility as of September 30, 2012, $230.6 million of the Convertible Notes has been classified as long-term debt in the accompanying condensed consolidated balance sheet as of September 30, 2012.

Concurrently with the offering of the Convertible Notes, the Company entered into convertible note hedge transactions with respect to its common stock (the “Purchased Options”) with counterparties affiliated with the initial purchasers of the Convertible Notes, for purposes of reducing the potential dilutive effect upon conversion of the Convertible Notes. The initial strike price of the Purchased Options is $27.25 per share of the Company’s common stock (the same as the initial conversion price of the Convertible Notes) and is subject to certain customary adjustments. The Purchased Options entitle the Company to purchase, subject to anti-dilution adjustments substantially similar to those contained in the indenture under which the Convertible Notes were issued, approximately 13.2 million shares of Company common stock. The Company may settle the Purchased Options in shares, cash or a combination of cash and shares, at the Company’s option. See Note 16 for further disclosure.

Separately and concurrently with entering into the Purchased Options, the Company also entered into warrant transactions whereby it sold warrants to each of the hedge counterparties entitling them to acquire up to approximately 13.2 million shares of common stock at an initial exercise price of $32.70 per share, subject to anti-dilution adjustments. The warrants may be settled only in shares of the Company’s common stock. See Note 16 for further disclosure.