NOTE 6: DEBT

Debt at December 31 is detailed as follows:



	Effective
in thousands	Interest Rates	2015	2014
Short-term Debt
Bank line of credit expires 2020 1, 2, 3	n/a	$ 0	$ 0
Total short-term debt		$ 0	$ 0
Long-term Debt
Bank line of credit expires 2020 1, 2, 3	1.75%	$ 235,000	$ 0
10.125% notes due 2015	n/a	0	150,000
6.50% notes due 2016	n/a	0	125,001
6.40% notes due 2017	n/a	0	218,633
7.00% notes due 2018	7.87%	272,512	400,000
10.375% notes due 2018	10.63%	250,000	250,000
7.50% notes due 2021	7.75%	600,000	600,000
8.85% notes due 2021	8.88%	6,000	6,000
Industrial revenue bond due 2022	n/a	0	14,000
4.50% notes due 2025	4.65%	400,000	0
7.15% notes due 2037	8.05%	240,188	240,188
Other notes 2	6.25%	498	637
Unamortized discounts and debt issuance costs	n/a	(23,734)	(22,716)
Unamortized deferred interest rate swap gain 4	n/a	0	3,036
Total long-term debt including current maturities 5		$ 1,980,464	$ 1,984,779
Less current maturities		130	150,137
Total long-term debt		$ 1,980,334	$ 1,834,642
Total debt 6		$ 1,980,464	$ 1,984,779
Estimated fair value of long-term debt		$ 2,204,816	$ 2,092,673


1	Borrowings on the bank line of credit are classified as short-term debt if we intend to repay within twelve months and as long-term debt otherwise.
2	Non-publicly traded debt.
3	The effective interest rate is the spread over LIBOR as of the balance sheet dates.
4	The unamortized deferred gain was realized upon the August 2011 settlement of interest rate swaps as discussed in Note 5.
5	The debt balances as of December 31, 2014 have been adjusted to reflect our early adoption of ASU 2015-03 and related election as discussed in Note 1 under the caption New Accounting Standards.
6	Face value of our debt is equal to total debt plus unamortized discounts and debt issuance costs, and unamortized deferred interest rate swap gain, as follows: December 31, 2015 — $2,004,198 thousand and December 31, 2014 — $2,004,459 thousand.

Our total debt is presented in the table above net of unamortized discounts from par, unamortized deferred debt issuance costs and unamortized deferred interest rate swap settlement gains. Discounts, deferred debt issuance costs and deferred swap settlement gains are amortized using the effective interest method over the terms of the respective notes.

The estimated fair value of our debt presented in the table above was determined by: (1) averaging several asking price quotes for the publicly traded notes and (2) assuming par value for the remainder of the debt. The fair value estimates for the publicly traded notes were based on Level 2 information (as defined in Note 1, caption Fair Value Measurements) as of their respective balance sheet dates.

LINE OF CREDIT

In June 2015, we cancelled our secured $500,000,000 line of credit and entered into an unsecured $750,000,000 line of credit (incurring $2,589,000 of transaction fees).

The line of credit agreement expires in June 2020 and contains affirmative, negative and financial covenants customary for an unsecured facility. The primary negative covenant limits our ability to incur secured debt. The financial covenants are: (1) a maximum ratio of debt to EBITDA of 3.5:1 through September 2016 and 3.25:1 thereafter, and (2) a minimum ratio of EBITDA to net cash interest expense of 3.0:1. As of December 31, 2015, we were in compliance with the line of credit covenants.

Borrowings on our line of credit are classified as short-term debt if we intend to repay within twelve months and as long-term debt if we have the intent and ability to extend repayment beyond twelve months. Borrowings bear interest, at our option, at either LIBOR plus a credit margin ranging from 1.00% to 2.00%, or SunTrust Bank’s base rate (generally, its prime rate) plus a credit margin ranging from 0.00% to 1.00%. The credit margin for both LIBOR and base rate borrowings is determined by either our ratio of debt to EBITDA or our credit ratings, based on the metric that produces the lower credit margin. Standby letters of credit, which are issued under the line of credit and reduce availability, are charged a fee equal to the credit margin for LIBOR borrowings plus 0.175%. We also pay a commitment fee on the daily average unused amount of the line of credit that ranges from 0.10% to 0.35% based on either our ratio of debt to EBITDA or our credit ratings, based on the metric that produces the lower fee. As of December 31, 2015, the credit margin for LIBOR borrowings was 1.75%, the credit margin for base rate borrowings was 0.75%, and the commitment fee for the unused amount was 0.25%.

As of December 31, 2015, our available borrowing capacity was $476,136,000. Utilization of the borrowing capacity was as follows:

$235,000,000 was borrowed

$38,864,000 was used to provide support for outstanding standby letters of credit

TERM DEBT

All of our term debt is unsecured. All such debt, other than the $498,000 of other notes, is governed by two essentially identical indentures that contain customary investment-grade type covenants. The primary covenant in both indentures limits the amount of secured debt we may incur without ratably securing such debt. As of December 31, 2015, we were in compliance with all of the term debt covenants.

In August 2015, we repaid our $14,000,000 industrial revenue bond due 2022 via borrowing on our line of credit. The repayment did not incur any prepayment penalties. Additionally, in December 2015, we repaid our $150,000,000 10.125% notes due 2015 via borrowing on our line of credit.

In March 2015, we issued $400,000,000 of 4.50% senior notes due 2025. Proceeds (net of underwriter fees and other transaction costs) of $395,207,000 were partially used to fund the March 30, 2015 purchase, via tender offer, of $127,303,000 principal amount (32%) of the 7.00% notes due 2018. The March 2015 debt purchase cost $145,899,000, including an $18,140,000 premium above the principal amount of the notes and transaction costs of $456,000. The premium primarily reflects the trading price of the notes relative to par prior to the tender offer commencement. Additionally, we recognized $3,138,000 of net noncash expense associated with the acceleration of a proportional amount of unamortized discounts, deferred debt issuance costs, and deferred interest rate derivative settlement gains and losses. The combined first quarter charge of $21,734,000 is presented in the accompanying Consolidated Statement of Comprehensive Income as a component of interest expense for the year ended December 31, 2015.

The remaining net proceeds from the March 2015 debt issuance, together with cash on hand and borrowings under our line of credit, funded: (1) the April 2015 redemption of $218,633,000 principal amount (100%) of the 6.40% notes due 2017, (2) the April 2015 redemption of $125,001,000 principal amount (100%) of the 6.50% notes due 2016 and (3) the April 2015 purchase, via the tender offer commenced in March 2015 of $185,000 principal amount (less than 1%) of the 7.00% notes due 2018. The April 2015 debt purchases cost $385,024,000, including a $41,153,000 premium above the principal amount of the notes and transaction costs of $52,000. The premium primarily reflects the make-whole value of the 2016 notes and the 2017 notes. Additionally, we recognized $4,136,000 of net noncash expense associated with the acceleration of unamortized discounts, deferred debt issuance costs, and deferred interest rate derivative settlement gains and losses. The combined second quarter charge of $45,341,000 is presented in the accompanying Consolidated Statement of Comprehensive Income as a component of interest expense for the year ended December 31, 2015.

In March 2014, we purchased $506,366,000 principal amount of debt through a tender offer as follows: $374,999,000 of 6.50% notes due in 2016 and $131,367,000 of 6.40% notes due in 2017. This debt purchase was funded by the sale of our cement and concrete businesses in the Florida area as described in Note 19. The March 2014 debt purchases cost $579,659,000, including a $71,829,000 premium above the principal amount of the notes and transaction costs of $1,464,000. The premium primarily reflects the trading price of the notes relative to par prior to the tender offer commencement. Additionally, we recognized a net noncash benefit of $344,000 associated with the acceleration of a proportional amount of unamortized discounts, deferred debt issuance costs, and deferred interest rate derivative settlement gains and losses. The combined charge of $72,949,000 is presented in the accompanying Consolidated Statement of Comprehensive Income as a component of interest expense for the year ended December 31, 2014.

DEBT PAYMENTS

As described above, during the first and second quarters of 2015, we purchased/redeemed $471,122,000 principal amount of debt using the proceeds from the March 2015 debt issuance, cash on hand and borrowings on our line of credit. Additionally in 2015, we borrowed on our line of credit during August to repay our $14,000,000 industrial revenue bond due 2022 and during December to repay our $150,000,000 10.125% notes due 2015.

There were no material scheduled debt payments during 2014. However, as described above, we purchased $506,366,000 principal amount of debt through a tender offer in the first quarter of 2014.

The total scheduled (principal and interest) debt payments, excluding draws, if any, on the line of credit, for the five years subsequent to December 31, 2015 are as follows:



in thousands	Total	Principal	Interest
Debt Payments (excluding the line of credit)
2016	$ 125,878	$ 130	$ 125,748
2017	125,878	138	125,740
2018	638,728	522,534	116,194
2019	80,740	23	80,717
2020	80,740	25	80,715

STANDBY LETTERS OF CREDIT

We provide, in the normal course of business, certain third-party beneficiaries standby letters of credit to support our obligations to pay or perform according to the requirements of an underlying agreement. Such letters of credit typically have an initial term of one year, typically renew automatically, and can only be modified or cancelled with the approval of the beneficiary. All of our standby letters of credit are issued by banks that participate in our $750,000,000 line of credit, and reduce the borrowing capacity thereunder. Our standby letters of credit as of December 31, 2015 are summarized by purpose in the table below:



in thousands
Standby Letters of Credit
Risk management insurance				$ 33,111
Reclamation/restoration requirements				5,753
Total				$ 38,864