DEBT, FINANCING ARRANGEMENTS, AND LEASES

Long-Term Debt

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



	December 31,
	2018			2017
	(Thousands of Dollars)
6.05% senior unsecured notes due 2018	$	—		$	250,000
7.125% unsecured debentures due 2025	85,000			85,000
4.0% unsecured debentures due 2027	500,000			250,000
Debt issuance costs	(4,507		)	(2,415		)
Unamortized debt discount	(4,325		)	(963		)
Total long-term debt, including current portion	576,168			581,622
Long-term debt due within one year	—			249,874
Total long-term debt less current portion	$	576,168		$	331,748

There are no maturities applicable to long-term debt outstanding through 2023.

No property is pledged as collateral under any of our long-term debt.

Restrictive Debt Covenants

At December 31, 2018, none of our debt instruments restrict the amount of distributions to our parent, provided, however, that under the credit facility described below, we are restricted from making distributions to our parent during an event of default if we have directly incurred indebtedness under the credit facility. Our debt agreements contain restrictions on our ability to incur secured debt beyond certain levels.

Issuance and Retirement of Long-Term Debt

On August 24, 2018, we issued $250 million of 4.0 percent senior unsecured notes due 2027 to investors in a private debt placement. We used the net proceeds to repay the intercompany debt owed to Williams in connection with the repayment of our 6.05 percent senior notes at their maturity on June 15, 2018 and for general corporate purposes. The notes, which are an additional issuance of the 4.0 percent senior unsecured notes due 2027 we originally issued on April 3, 2017 and subsequently exchanged for substantially identical registered notes, were issued under the Indenture, dated as of April 3, 2017, between us and The Bank of New York Mellon Trust Company, N.A., as trustee. As part of the issuance we entered into a registration rights agreement with the initial purchasers of the notes. Under the terms of the agreement, we were obligated to file and consummate a registration statement for an offer to exchange the notes for a new issue of substantially identical notes registered under the Securities Act within 365 days after closing and to use commercially reasonable efforts to complete the exchange offer. We filed a registration statement, which was subsequently declared effective by the SEC, and consummated the exchange offer in the fourth quarter of 2018.

On April 3, 2017, we issued $250 million of 4.0 percent senior unsecured notes due 2027 to investors in a private debt placement. We used the net proceeds to retire $185 million of 5.95 percent senior unsecured notes that matured on April 15, 2017, and for general corporate purposes. We filed a registration statement, which the SEC declared effective in January 2018, and consummated the exchange offer in the first quarter of 2018.

Credit Facility

On July 13, 2018, we, along with Williams and Transco (the “borrowers”), the lenders named therein, and an administrative agent entered into a Credit Agreement with aggregate commitments available of $4.5 billion, with up to an additional $500 million increase in aggregate commitments available under certain circumstances. We and Transco are each subject to a $500 million borrowing sublimit. The facility made available under the Credit Agreement is initially available for five years from the Credit Agreement Effective Date (the “Maturity Date”). The 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 the seventh anniversary of the Credit Agreement Effective Date, subject to certain conditions. The Credit Agreement allows for same day swingline borrowings up to an aggregate amount of $200 million, subject to other utilization of the aggregate commitments under the Credit Agreement. Letter of credit commitments of $1.0 billion are, subject to the $500 million borrowing sublimit applicable to us and Transco, available to the borrowers. At December 31, 2018, no letters of credit have been issued and loans to Williams of $160 million were outstanding under the credit facility.

Measured as of December 31, 2018, we are in compliance with our financial covenant under the credit facility.

Various covenants may limit, among other things, a borrower’s and its material subsidiaries’ ability to grant certain liens supporting indebtedness, 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 the respective 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 swing line loans, each time funds are borrowed, the applicable borrower may choose from two methods of calculating interest: a fluctuating base rate equal to Citibank N.A.'s alternate base rate plus an applicable margin or a periodic fixed rate equal to the London Interbank Offered Rate plus an applicable margin. We are required to pay a commitment fee based on the unused portion of the credit facility. The applicable margin and the commitment fee are determined by reference to a pricing schedule based on the applicable borrower's senior unsecured long-term debt ratings.

Williams participates in a commercial paper program, and Williams management considers amounts outstanding under this program to be a reduction of available capacity under the credit facility. The program allows a maximum outstanding amount at anytime of $4 billion of unsecured commercial paper notes. At December 31, 2018, Williams had no outstanding commercial paper.

Lease Obligations

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 had an initial term of approximately 10 years, and in May 2018 was renewed for an additional 10 years, expiring December 31, 2029.

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)
2019	$	1,942
2020	1,968
2021	1,920
2022	1,909
2023	1,832
Thereafter	11,508
Total	$	21,079

Operating lease rental expense, net of sublease revenues, amounted to $2.8 million, $3.5 million, and $2.7 million for 2018, 2017, and 2016, respectively.