Debt

9 Months Ended

Sep. 30, 2020

All our debt is held at the parent, which is reported in the Other segment. The following table summarizes our outstanding debt obligations and their classification in the accompanying consolidated balance sheets:


	September 30, 2020		December 31, 2019

	(In millions)
Current portion of long-term debt: (1)
Term loan facility	$	—	$	6
1.125% Convertible Notes, net of unamortized discount	—		12
Total	$	—	$	18
Non-current portion of long-term debt:
4.375% Notes due 2028	$	800	$	—
5.375% Notes due 2022	700		700
4.875% Notes due 2025	330		330
Term loan facility	—		214
Deferred debt issuance costs	(17)		(7)
Total	$	1,813	$	1,237

______________________

(1)Reported in “Accounts payable, accrued liabilities and other.”

Credit Agreement

In June 2020, we entered into a credit agreement (the “Credit Agreement”) that replaced our prior credit agreement. The terms of the Credit Agreement are substantially similar to the terms of the prior agreement. Among various provisions, significant changes incorporated to the Credit Agreement included:

•An increase of the revolving credit facility (the “Credit Facility”) from $500 million to $1.0 billion;

•A $15 million swingline sub-facility and a $100 million letter of credit sub-facility;

•An increase of incremental term loans available to finance certain acquisitions from $150 million to $500 million, plus an unlimited amount as long as our consolidated net leverage ratio is not greater than 3:1;

•The ability to engage in acquisitions where the consummation of such acquisitions is not conditioned on the availability of, or on obtaining, third-party financing;

•Termination of the term loan facility under the prior credit agreement, which was repaid as described below; and

•LIBOR succession provisions.

The Credit Agreement has a term of five years, and all amounts outstanding will be due and payable on June 8, 2025. Borrowings under the Credit Agreement bear interest based, at our election, on a base rate or other defined rate, plus in each case, the applicable margin. In addition to interest payable on the principal amount of indebtedness outstanding from time to time under the Credit Agreement, we are required to pay a quarterly commitment fee.

The Credit Agreement contains customary non-financial and financial covenants. As of September 30, 2020, we were in compliance with all financial and non-financial covenants under the Credit Agreement and other long-term debt. As of September 30, 2020, no amounts were outstanding under the Credit Facility.

In the nine months ended September 30, 2020, we recognized losses on debt repayment of $5 million in connection with repayment of our term loan facility and other financing transactions. In the third quarter and nine months ended September 30, 2019, we recognized a loss on debt repayment of $2 million and a gain on debt repayment of $15 million, respectively, in connection with convertible senior notes repayment transactions.

High-Yield Senior Notes

Our high-yield senior notes are described below. Each of these notes are senior unsecured obligations of Molina and rank equally in right of payment with all existing and future senior debt, and senior to all existing and future subordinated debt of Molina. In addition, each of the notes contain customary non-financial covenants and change of control provisions.

The indentures governing the high-yield senior notes contain cross-default provisions that are triggered upon default by us or any of our subsidiaries on any indebtedness in excess of the amount specified in the applicable indenture.

4.375% Notes due 2028. On June 2, 2020, we completed the private offering of $800 million aggregate principal amount of senior notes (the “4.375% Notes”) due June 15, 2028, unless earlier redeemed. The 4.375% Notes contain optional early redemption provisions, with redemption prices in excess of par. Interest, at a rate of 4.375% per annum, is payable semiannually in arrears on June 15 and December 15 of each year, commencing December 15, 2020. A portion of the net proceeds from the 4.375% Notes offering was used to repay $600 million principal amount outstanding under the term loan facility of our prior credit agreement, and the balance is intended to be used for general corporate purposes. Deferred issuance costs amounted to $11 million.

5.375% Notes due 2022. We had $700 million aggregate principal amount of senior notes (the “5.375% Notes”) outstanding as of September 30, 2020, which are due November 15, 2022, unless earlier redeemed. Interest, at a rate of 5.375% per annum, is payable semiannually in arrears on May 15 and November 15.

4.875% Notes due 2025. We had $330 million aggregate principal amount of senior notes (the “4.875% Notes”) outstanding as of September 30, 2020, which are due June 15, 2025, unless earlier redeemed. Interest, at a rate of 4.875% per annum, is payable semiannually in arrears on June 15 and December 15.

1.125% Cash Convertible Senior Notes due 2020

For a description of the 1.125% cash convertible senior notes due January 15, 2020 (the “1.125% Convertible Notes”), see Note 11, “Debt,” in our 2019 Annual Report on Form 10-K. In January 2020, we paid $39 million to settle the outstanding $12 million principal amount of the 1.125% Convertible Notes, and settle the related conversion option.