DEBT, FINANCING ARRANGEMENTS, AND LEASES

Long-Term Debt

Long-term debt, presented net of unamortized discount, consists of the following:



	December 31,
	2014		2013
	(Thousands of Dollars)
5.95% senior unsecured notes due 2017	$	184,854	$	184,790
6.05% senior unsecured notes due 2018	249,771		249,705
7% senior unsecured notes due 2016	174,919		174,864
7.125% unsecured debentures due 2025	84,876		84,865
Total long-term debt	$	694,420	$	694,224

As of December 31, 2014, cumulative maturities of outstanding long-term debt (at face value) for the next five years are as follows:



	(Thousands of Dollars)
2016: 7% senior unsecured notes	$	175,000
2017: 5.95% senior unsecured notes	185,000
2018: 6.05% senior unsecured notes	250,000
Total	$	610,000

In the second quarter of 2006, we entered into certain forward starting interest rate swaps prior to our issuance of fixed rate, long-term debt. The swaps, which were settled near the date of the June 2006 issuance of the 7% senior unsecured notes due 2016, hedged the variability of forecasted interest payments arising from changes in interest rates prior to the issuance of our fixed rate debt. The settlement resulted in a gain, recorded in Accumulated other comprehensive income, that is being amortized to reduce interest expense over the life of the related debt.

Restrictive Debt Covenants

At December 31, 2014, none of our debt instruments restrict the amount of distributions to our parent. Our debt agreements contain restrictions on our ability to incur secured debt beyond certain levels.

Credit Facility

On December 1, 2014, we, along with WPZ, Transcontinental Gas Pipe Line, LLC, (Transco), the lenders named therein, and an administrative agent, entered into Amendment No. 1 and Consent to the First Amended and Restated Credit Agreement, dated as of July 31, 2013. The amendment provided the consent of the lenders for this credit agreement to continue for ACMP upon consummation of the merger with WPZ and the termination of ACMP’s existing credit agreement. In addition, the amendment provided the consent that certain existing liens and guarantees of indebtedness of ACMP that were terminated in connection with the merger would not become liens and guarantees of indebtedness under this credit agreement. At December 31, 2014, no letters of credit were issued and no loans were outstanding under this credit facility. On February 2, 2015, this credit facility was terminated in connection with the merger.

On February 2, 2015, we, along with WPZ, Transco, the lenders named therein, and an administrative agent, entered into the Second Amended and Restated Credit Agreement with aggregate commitments available of $3.5 billion, with up to an additional $500 million increase in aggregate commitments available under certain circumstances. The maturity date of the facility is February 2, 2020. However, the co-borrowers may request an extension of the maturity date for an additional one-year period, up to two times, to allow a maturity date as late as February 2, 2022, under certain circumstances. The agreement allows for swing line loans up to an aggregate amount of $150 million, subject to available capacity under the credit facility, and letters of credit commitments available to WPZ of $1.125 billion. We are able to borrow up to $500 million under this credit facility to the extent not otherwise utilized by the other co-borrowers.

Under the credit facility, WPZ is required to maintain a ratio of debt to EBITDA (each as defined in the credit facility) that must be no greater than 5.0 to 1.00. For the fiscal quarter and the two following fiscal quarters in which one or more acquisitions have been executed, WPZ is required to maintain a ratio of debt to EBITDA of no greater than 5.5 to 1.00. For us, the ratio of debt to capitalization (defined as net worth plus debt) must be no greater than 65 percent. Measured as of December 31, 2014, we are in compliance with this financial covenant.

Various covenants may limit, among other things, a borrower’s and its material subsidiaries’ ability to grant certain liens supporting indebtedness, a borrower’s ability to merge or consolidate, sell all or substantially all of its assets, enter into certain affiliate transactions, make certain distributions during an event of default, enter into certain restrictive agreements, and allow any material change in the nature of its business.

If an event of default with respect to a borrower occurs under the credit facility, the lenders will be able to terminate the commitments for all borrowers and accelerate the maturity of any loans of the defaulting borrower under the credit facility agreement and exercise other rights and remedies.

Other than swingline loans, each time funds are borrowed, the borrower must choose whether such borrowing will be an alternate base rate borrowing or a Eurodollar borrowing. If such borrowing is an alternate base rate borrowing, interest is calculated on the basis of the greater of (a) the Prime Rate, (b) the Federal Funds Effective Rate plus 1/2 of 1 percent, and (c) a periodic fixed rate equal to the London Interbank Offered Rate (LIBOR) plus 1 percent, plus, in the case of each of (a), (b), and (c), an applicable margin. If the borrowing is a Eurodollar borrowing, interest is calculated on the basis of LIBOR for the relevant period plus an applicable margin. Interest on swingline loans is calculated as the sum of the alternate base rate plus an applicable margin. The borrower is required to pay a commitment fee based on the unused portion of the credit facility. The applicable margin and the commitment fee are determined for each borrower by reference to a pricing schedule based on such borrower’s senior unsecured long-term debt ratings.

WPZ participates in a commercial paper program, and WPZ management considers amounts outstanding under this program to be a reduction of available capacity under the credit facility. On February 2, 2015, WPZ amended and restated the commercial paper program for the merger and to allow a maximum outstanding of $3 billion of unsecured commercial paper notes. At December 31, 2014, WPZ had $798 million in outstanding commercial paper.

Leases

Our leasing arrangements include mostly premise and equipment leases that are classified as operating leases.

Effective October 1, 2009, we entered into an agreement to lease office space from a third party. The agreement has an initial term of approximately 10 years, with an option to renew for an additional 5 or 10 year term.

Following are the estimated future minimum annual rental payments required under operating leases, which have initial or remaining noncancelable lease terms in excess of one year:



	(Thousands of Dollars)
2015	$	2,581
2016	2,608
2017	2,634
2018	2,661
2019	2,687
Total	$	13,171

Operating lease rental expense, net of sublease revenues, amounted to $2.5 million, $2.3 million, and $2.2 million for 2014, 2013, and 2012, respectively.