Debt

9 Months Ended

Sep. 30, 2021

Debt

Debt

7. DEBT:

The Company’s debt and finance lease obligations at September 30, 2021 and December 31, 2020 consisted of (in thousands):

	September 30,		December 31,
	2021		2020
$700M Revolving Credit Facility, interest at LIBOR plus 2.25%, maturing March 31, 2024	$	180,000	$	106,000
$300M Term Loan A, interest at LIBOR plus 2.25%, maturing March 31, 2025		300,000		300,000
$500M Term Loan B, interest at LIBOR plus 2.00%, maturing May 11, 2024		377,500		381,250
$400M Senior Notes, interest at 5.0%, original maturity April 15, 2023		—		400,000
$600M Senior Notes, interest at 4.50%, maturing February 15, 2029		600,000		—
$700M Senior Notes, interest at 4.75%, maturing October 15, 2027		700,000		700,000
$800M Gaylord Rockies Term Loan, interest at LIBOR plus 2.50%, maturing July 2, 2023		800,000		800,000
Finance lease obligations		925		1,095
Unamortized deferred financing costs		(34,414)		(32,504)
Unamortized premium		1,957		2,167
Total debt	$	2,925,968	$	2,658,008

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, 2020.

At September 30, 2021, there were no defaults under the covenants related to the Company’s outstanding debt based on the amended terms of the Company’s credit agreement.

Tender Offer and Redemption of $400 Million 5% Senior Notes Due 2023

On February 9, 2021, the Company commenced a cash tender offer for any and all outstanding $400 million 5% senior notes due 2023 (the “$400 Million 5% Senior Notes”) at a redemption price of $1,005.00 per $1,000 principal amount. Pursuant to the tender offer, $161.9 million aggregate principal amount of the $400 Million 5% Senior Notes were validly tendered. The Company used a portion of the proceeds from the issuance of the $600 million 4.50% senior notes discussed below to fund the tender offer.

In accordance with the indenture governing the $400 Million 5% Senior Notes, subsequent to expiration of the tender offer, in February 2021 the Company gave irrevocable notice of the redemption of all remaining $400 Million 5% Senior

Notes not tendered in the tender offer. The redemption and cancellation of the remaining $400 Million 5% Senior Notes was completed on April 15, 2021. The Company used a portion of the proceeds from the issuance of the $600 million 4.50% senior notes discussed below to fund the redemption.

As a result of the Company’s purchase of tendered $400 Million 5% Senior Notes and the redemption of all untendered $400 Million 5% Senior Notes, the Company recognized a loss on extinguishment of debt of $2.9 million in the nine months ended September 30, 2021.

$600 Million 4.50% Senior Notes Due 2029

On February 17, 2021, the Operating Partnership and RHP Finance Corporation, a Delaware corporation (“Finco”) completed the private placement of $600.0 million in aggregate principal amount of 4.50% senior notes due 2029 (the “$600 Million 4.50% Senior Notes”), which are guaranteed by the Company and its subsidiaries that guarantee the Company’s credit agreement. The $600 Million 4.50% Senior Notes and guarantees were issued pursuant to an indenture by and among the issuing subsidiaries, the guarantors and U.S. Bank National Association, as trustee. The $600 Million 4.50% Senior Notes have a maturity date of February 15, 2029 and bear interest at 4.50% per annum, payable semi-annually in cash in arrears on February 15 and August 15 each year, beginning on August 15, 2021. The $600 Million 4.50% Senior Notes are general unsecured and unsubordinated obligations of the issuing subsidiaries and rank equal in right of payment with such subsidiaries’ existing and future senior unsecured indebtedness, including the Company’s $700 million 4.75% senior notes due 2027, and senior in right of payment to future subordinated indebtedness, if any. The $600 Million 4.50% Senior Notes are effectively subordinated to the issuing subsidiaries’ secured indebtedness to the extent of the value of the assets securing such indebtedness. The guarantees rank equally in right of payment with the applicable guarantor’s existing and future senior unsecured indebtedness and senior in right of payment to any future subordinated indebtedness of such guarantor. The $600 Million 4.50% Senior Notes are effectively subordinated to any secured indebtedness of any guarantor to the extent of the value of the assets securing such indebtedness and structurally subordinated to all indebtedness and other obligations of the Operating Partnership’s subsidiaries that do not guarantee the $600 Million 4.50% Senior Notes.

The net proceeds from the issuance of the $600 Million 4.50% Senior Notes totaled approximately $591 million, after deducting the initial purchasers’ discounts, commissions and offering expenses. The Company used a significant portion of these proceeds to tender and redeem the previous $400 Million 5% Senior Notes, as discussed above, and to repay all of the amounts outstanding under the Company’s revolving credit facility. The Company used the remaining net proceeds for general corporate purposes.

The $600 Million 4.50% Senior Notes are redeemable before February 15, 2024, in whole or in part, at 100.00%, plus accrued and unpaid interest thereon to, but not including, the redemption date, plus a make-whole premium. The $600 Million 4.50% Senior Notes will be redeemable, in whole or in part, at any time on or after February 15, 2024 at a redemption price expressed as a percentage of the principal amount thereof, which percentage is 102.250%, 101.500%, 100.750%, and 100.000% beginning on February 15 of 2024, 2025, 2026, and 2027, respectively, plus accrued and unpaid interest thereon to, but not including, the redemption date.

Interest Rate Derivatives

The Company has entered into interest rate swaps to manage interest rate risk associated with the Company’s $500 million term loan B and the Gaylord Rockies $800 million term loan. Each swap has been designated as a cash flow hedge whereby the Company receives variable-rate amounts in exchange for fixed-rate payments over the life of the agreement without exchange of the underlying principal amount. The Company does not use derivatives for trading or speculative purposes and currently does 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 $14.2 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 September 30, 2021 and December 31, 2020 is as follows (in thousands):

						Estimated Fair Value
						Asset (Liability) Balance
		Strike			Notional	September 30,		December 31,
Hedged Debt	Type	Rate	Index	Maturity Date	Amount	2021		2020
Term Loan B	Interest Rate Swap	1.2235%	1-month LIBOR	May 11, 2023	$ 87,500	$	(1,399)	$	(2,206)
Term Loan B	Interest Rate Swap	1.2235%	1-month LIBOR	May 11, 2023	$ 87,500		(1,399)		(2,206)
Term Loan B	Interest Rate Swap	1.2235%	1-month LIBOR	May 11, 2023	$ 87,500		(1,399)		(2,206)
Term Loan B	Interest Rate Swap	1.2315%	1-month LIBOR	May 11, 2023	$ 87,500		(1,410)		(2,222)
Gaylord Rockies Term Loan	Interest Rate Swap	1.6500%	1-month LIBOR	August 1, 2022	$ 800,000		(10,283)		(18,979)
						$	(15,890)	$	(27,819)

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
	September 30,				Accumulated OCI	September 30,
	2021		2020		into Income (Expense)	2021		2020
Derivatives in Cash Flow Hedging Relationships:
Interest rate swaps	$	(546)	$	183	Interest expense	$	(4,187)	$	(3,989)
Total derivatives	$	(546)	$	183		$	(4,187)	$	(3,989)

	Amount of Gain (Loss)					Amount of Gain (Loss)
	Recognized in OCI on					Reclassified from Accumulated
	Derivative				Location of Gain (Loss)	OCI into Income (Expense)
	Nine Months Ended				Reclassified from	Nine Months Ended
	September 30,				Accumulated OCI	September 30,
	2021		2020		into Income (Expense)	2021		2020
Derivatives in Cash Flow Hedging Relationships:
Interest rate swaps	$	(370)	$	(39,965)	Interest expense	$	(12,298)	$	(6,479)
Total derivatives	$	(370)	$	(39,965)		$	(12,298)	$	(6,479)

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 September 30, 2021 and 2020 was $32.4 million and $28.1 million, respectively, and for the nine months ended September 30, 2021 and 2020 was $93.1 million and $87.5 million, respectively.

At September 30, 2021, 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 $17.1 million. As of September 30, 2021, 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 $17.1 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.