Debt

6 Months Ended

Jun. 30, 2019

Debt, net of unamortized original issue discounts or premiums, and unamortized debt issuance costs, consists of the following:



	June 30, 2019			December 31, 2018
Accounts Receivable Securitization Facility expiring 2020 (1) (2)	$	945		$	850
$3.75 billion ABL Facility expiring 2024 (1) (3)	1,646			1,685
Term loan facility expiring 2025 (1)	984			988
4 ⁵/₈ percent Senior Secured Notes due 2023	994			994
5 ³/₄ percent Senior Notes due 2024 (4)	—			842
5 ¹/₂ percent Senior Notes due 2025	794			794
4 ⁵/₈ percent Senior Notes due 2025	742			741
5 ⁷/₈ percent Senior Notes due 2026	999			999
6 ¹/₂ percent Senior Notes due 2026	1,088			1,087
5 ¹/₂ percent Senior Notes due 2027	992			991
4 ⁷/₈ percent Senior Notes due 2028 (5)	1,651			1,650
4 ⁷/₈ percent Senior Notes due 2028 (5)	4			4
5 ¹/₄ percent Senior Notes due 2030 (6)	741			—
Finance leases (7)	115			—
Capital leases (7)	—			122
Total debt	11,695			11,747
Less short-term portion (8)	(995		)	(903		)
Total long-term debt	$	10,700		$	10,844

___________________

(1)The table below presents financial information associated with our variable rate indebtedness as of and for the six months ended June 30, 2019. We have borrowed the full available amount under the term loan facility. The principal obligation under the term loan facility is required to be repaid in quarterly installments in an aggregate amount equal to 1.0 percent per annum, with the balance due at the maturity of the facility. The average amount of debt outstanding under the term loan facility decreases slightly each quarter due to the requirement to repay a portion of the principal obligation.



	ABL facility			Accounts receivable securitization facility			Term loan facility
Borrowing capacity, net of letters of credit	$	2,046		$	30		$	—
Letters of credit	45
Interest rate at June 30, 2019	3.9		%	3.2		%	4.2		%
Average month-end debt outstanding	1,558			898			995
Weighted-average interest rate on average debt outstanding	4.0		%	3.3		%	4.2		%
Maximum month-end debt outstanding	1,691			958			998

(2)

In June 2019, the accounts receivable securitization facility was amended, primarily to extend the maturity date which may be further extended on a 364-day basis by mutual agreement with the purchasers under the facility. The facility expires on June 26, 2020. Borrowings under the accounts receivable securitization facility are permitted only to the extent that the face amount of the receivables in the collateral pool, net of applicable reserves and other deductions, exceeds the outstanding loans. As of June 30, 2019, there were $1.001 billion of receivables, net of applicable reserves and other deductions, in the collateral pool.


(3)	In February 2019, the ABL facility was amended, primarily to increase the facility size to $3.75 billion, extend the maturity date to February 2024 and make a portion of the facility available for borrowing in British Pounds and Euros by certain subsidiaries of URNA in Europe.


(4)	In May 2019, URNA redeemed all of its 5 ³/₄ percent Senior Notes. Upon redemption, we recognized a loss of $32 in interest expense, net. The loss represented the difference between the net carrying amount and the total purchase price of the redeemed notes.


(5)	URNA separately issued 4 ⁷/₈ percent Senior Notes in August 2017 and in September 2017. Following the issuances, URNA consummated an exchange offer pursuant to which most of the 4 ⁷/₈ percent Senior Notes issued in September 2017 were exchanged for additional notes fungible with the 4 ⁷/₈ percent Senior Notes issued in August 2017.

(6)

In May 2019, URNA issued $750 aggregate principal amount of 5 ¹/₄ percent Senior Notes (the “5 ¹/₄ percent Notes”) which are due January 15, 2030. The net proceeds from the issuance were approximately $741 (after deducting offering expenses). The 5 ¹/₄ percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The 5 ¹/₄ percent Notes may be redeemed on or after January 15, 2025, at specified redemption prices that range from 102.625 percent in 2025, to 100 percent in 2028 and thereafter, in each case, plus accrued and unpaid interest, if any. In addition, at any time on or prior to January 15, 2023, up to 40 percent of the aggregate principal amount of the 5 ¹/₄ percent Notes may be redeemed with the net cash proceeds of certain equity offerings at a redemption price equal to 105.250 percent of the aggregate principal amount of the notes plus accrued and unpaid interest, if any. The indenture governing the 5 ¹/₄ percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) mergers and consolidations; (iii) sales, transfers and other dispositions of assets; (iv) dividends and other distributions, stock repurchases and redemptions and other restricted payments; and (v) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. In addition, the covenant relating to dividends and other distributions, stock repurchases and redemptions and other restricted payments and the requirements relating to additional subsidiary guarantors will not apply to URNA and its restricted subsidiaries during any period when the 5 ¹/₄ percent Notes are rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain circumstances, another rating agency selected by URNA, provided at such time no default under the indenture has occurred and is continuing. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding 5 ¹/₄ percent Notes tendered at a purchase price in cash equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon.


(7)	As discussed in note 8 to the condensed consolidated financial statements, we adopted an updated lease accounting standard on January 1, 2019. Upon adoption of the new standard, the leases that were previously classified as capital leases through December 31, 2018 were classified as finance leases. There were no significant changes to the accounting upon this change in classification.


(8)	As of June 30, 2019, our short-term debt primarily reflects $945 of borrowings under our accounts receivable securitization facility.

Loan Covenants and Compliance

As of June 30, 2019, we were in compliance with the covenants and other provisions of the ABL, accounts receivable securitization and term loan facilities and the senior notes. Any failure to be in compliance with any material provision or covenant of these agreements could have a material adverse effect on our liquidity and operations.

The only financial maintenance covenant that currently exists under the ABL facility is the fixed charge coverage ratio. Subject to certain limited exceptions specified in the ABL facility, the fixed charge coverage ratio covenant under the ABL facility will only apply in the future if specified availability under the ABL facility falls below 10 percent of the maximum revolver amount under the ABL facility. When certain conditions are met, cash and cash equivalents and borrowing base collateral in excess of the ABL facility size may be included when calculating specified availability under the ABL facility. As of June 30, 2019, specified availability under the ABL facility exceeded the required threshold and, as a result, this financial maintenance covenant was inapplicable. Under our accounts receivable securitization facility, we are required, among other things, to maintain certain financial tests relating to: (i) the default ratio, (ii) the delinquency ratio, (iii) the dilution ratio and (iv) days sales outstanding. The accounts receivable securitization facility also requires us to comply with the fixed charge coverage ratio under the ABL facility, to the extent the ratio is applicable under the ABL facility.