Debt

3 Months Ended

Mar. 31, 2020

Debt

Debt

7. DEBT:

The Company’s debt and finance lease obligations at March 31, 2020 and December 31, 2019 consisted of (in thousands):

	March 31,		December 31,
	2020		2019
$700M Revolving Credit Facility, interest at LIBOR plus 1.55%, maturing March 31, 2024, less unamortized deferred financing costs of $8,126 and $0	$	391,874	$	—
$300M Term Loan A, interest at LIBOR plus 1.50%, maturing May 31, 2025, less unamortized deferred financing costs of $2,370 and $2,478		297,630		297,522
$500M Term Loan B, interest at LIBOR plus 2.00%, maturing May 11, 2024, less unamortized deferred financing costs of $4,268 and $4,501		380,732		381,749
$400M Senior Notes, interest at 5.0%, maturing April 15, 2023, less unamortized deferred financing costs of $2,992 and $3,222		397,008		396,778
$700M Senior Notes, interest at 4.75%, maturing October 15, 2027, less unamortized deferred financing costs of $11,489 and $11,808, plus unamortized premium of $2,367 and $2,434		690,878		690,626
$800M Term Loan (Gaylord Rockies JV), interest at LIBOR plus 2.50%, maturing July 2, 2023, less unamortized deferred financing costs of $7,483 and $8,015		792,517		791,985
Finance lease obligations		1,249		1,308
Total debt	$	2,951,888	$	2,559,968

Amounts due within one year consist of the amortization payments for the $500 million term loan B of 1.0% of the original principal balance, as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

At March 31, 2020, the Company was in compliance with all of its covenants related to its outstanding debt, and the lenders had waived the covenant in the credit facility that prohibits closure of the Gaylord Hotels properties for longer than a specified period of time. See Note 17, “Subsequent Events,” for additional discussion.

Interest Rate Derivatives

The Company may enter into interest rate swap agreements to hedge against interest rate fluctuations. The Company and the Gaylord Rockies joint venture have each entered into interest rate swaps to manage interest rate risk associated with the Company’s $500 million term loan B and the Gaylord Rockies joint venture’s $800 million term loan, respectively. Each swap has been designated as a cash flow hedge whereby the Company or the joint venture receives variable-rate amounts in exchange for fixed-rate payments over the life of the agreement without exchange of the underlying principal amount. Neither the Company nor the Gaylord Rockies joint venture use derivatives for trading or speculative purposes and currently do not hold any derivatives that are not designated as hedges.

For derivatives designated as and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive loss and subsequently reclassified to interest expense in the same period during which the hedged transaction affects earnings. These amounts reported in accumulated other comprehensive loss will be reclassified to interest expense as interest payments are made on the related variable-rate debt. The Company estimates that $13.6 million will be reclassified from accumulated other comprehensive loss to interest expense in the next twelve months.

The estimated fair value of the Company’s derivative financial instruments at March 31, 2020 and December 31, 2019 is as follows (in thousands):

						Estimated Fair Value
						Asset (Liability) Balance
		Strike			Notional	March 31,		December 31,
Hedged Debt	Type	Rate	Index	Maturity Date	Amount	2020		2019
Term Loan B	Interest Rate Swap	1.2235%	1-month LIBOR	May 11, 2023	$ 87,500	$	(2,464)	$	959
Term Loan B	Interest Rate Swap	1.2235%	1-month LIBOR	May 11, 2023	$ 87,500		(2,464)		959
Term Loan B	Interest Rate Swap	1.2235%	1-month LIBOR	May 11, 2023	$ 87,500		(2,464)		956
Term Loan B	Interest Rate Swap	1.2315%	1-month LIBOR	May 11, 2023	$ 87,500		(2,486)		934
Gaylord Rockies Loan	Interest Rate Swap	1.6500%	1-month LIBOR	August 1, 2022	$ 800,000		(24,887)		(2,174)
						$	(34,765)	$	1,634

Derivative financial instruments in an asset position are included in prepaid expenses and other assets and those in a liability position are included in other liabilities in the accompanying condensed consolidated balance sheets.

The effect of the Company’s derivative financial instruments on the accompanying condensed consolidated statements of operations for the respective periods is as follows (in thousands):

	Amount of Gain (Loss)					Amount of Gain (Loss)
	Recognized in OCI					Reclassified from Accumulated
	on Derivative				Location of Gain (Loss)	OCI into Income (Expense)
	Three Months Ended				Reclassified from	Three Months Ended
	March 31,				Accumulated OCI	March 31,
	2020		2019		into Income (Expense)	2020		2019
Derivatives in Cash Flow Hedging Relationships:
Interest rate swaps	$	(35,947)	$	—	Interest expense	$	452	$	—
Total derivatives	$	(35,947)	$	—		$	452	$	—

Reclassifications from accumulated other comprehensive loss for interest rate swaps are shown in the table above and included in interest expense. Total consolidated interest expense for the three months ended March 31, 2020 and 2019 was $29.4 million and $32.1 million, respectively.

At March 31, 2020, the fair value of derivatives in a net liability position including accrued interest but excluding any adjustment for nonperformance risk related to these agreements was $35.7 million. As of March 31, 2020, the Company has not posted any collateral related to these agreements and was not in breach of any agreement provisions. If the Company had breached any of these provisions, it could have been required to settle its obligations under the agreements at the aggregate termination value of $35.7 million. In addition, the Company has an agreement with its derivative counterparty that contains a provision whereby the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness.