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Debt
12 Months Ended
Dec. 31, 2018
Debt Disclosure [Abstract]  
Debt
Debt
Debt outstanding consisted of the following:
(in millions)
December 31,
2018
 
December 31,
2017
Senior Secured Term Loan B-3, payable in quarterly installments through April 9, 2023, and periodic variable interest at LIBOR or alternate base rate, plus applicable margin (4.52% at December 31, 2018 and 3.57% at December 31, 2017), including original issue discount and deferred financing fees of $5.0 million and $4.6 million, respectively, at December 31, 2018, and original issue discount and deferred financing fees of $6.2 million and $3.7 million, respectively, at December 31, 2017
$
1,892.0

 
$
1,971.5

Senior Secured Term Loan A-2, payable in quarterly installments through August 9, 2022, and periodic variable interest at LIBOR or alternate base rate, plus applicable margin (4.27% at December 31, 2018 and 3.07% at December 31, 2017), including original issue discount and deferred financing fees of $2.8 million and $3.6 million, respectively, at December 31, 2018, and original issue discount and deferred financing fees of $1.4 million and $0.3 million, respectively, at December 31, 2017
1,166.0

 
395.8

Senior Secured Term Loan B-4, payable in quarterly installments through June 19, 2025, with periodic variable interest at LIBOR or alternate base rate, plus applicable margin (4.52% at December 31, 2018), net of original issue discount and deferred financing fees of $2.3 million and $10.7 million, respectively, at December 31, 2018
982.0

 

Senior Secured Revolving Line of Credit

 
85.0

Other notes payable
7.3

 
11.0

Capital lease obligations
0.8

 
1.3

Total debt
4,048.1

 
2,464.6

Less short-term debt and current portion of long-term debt
(71.7
)
 
(119.3
)
Total long-term debt
$
3,976.4

 
$
2,345.3


Excluding any potential additional principal payments which may become due on the senior secured credit facility based on excess cash flows of the prior year, scheduled future maturities of total debt at December 31, 2018, were as follows:
(in millions)
 
December 31,
2018
2019
 
$
71.7

2020
 
93.5

2021
 
89.9

2022
 
1,044.9

2023
 
1,832.1

Thereafter
 
945.0

Unamortized original issue discounts and deferred financing fees
 
(29.0
)
Total debt
 
$
4,048.1


Senior Secured Credit Facility
On June 15, 2010, we entered into a senior secured credit facility with various lenders. This facility has been amended several times and currently consists of the Senior Secured Term Loan B-3, Senior Secured Term Loan A-2, the Senior Secured Term Loan B-4 and the Senior Secured Revolving Line of Credit.
On May 2, 2018, we amended certain provisions of our senior secured credit facility. This amendment among other things, allowed us the option to elect between two testing dates for the calculation of ratio requirements to enter into certain transactions. This amendment resulted in $0.1 million of fees expensed and recorded in other income and expense in the consolidated statements of income for the twelve months ended December 31, 2018, and $2.6 million of refinancing fees deferred on the balance sheet to be amortized into interest expense over the life of the loans.
On June 19, 2018, we borrowed an additional $800.0 million against our Senior Secured Term Loan A-2 and $600.0 million against a new tranche 4 of our Senior Secured Term Loan B (“Senior Secured Term Loan B-4”) to fund the acquisition of Callcredit. On June 29, 2018, we borrowed an additional $400.0 million of our Senior Secured Term Loan B-4 to fund another acquisition and to repay a portion of our Senior Secured Revolving Line of Credit. The new financing resulted in $12.0 million of fees expensed and recorded in other income and expense in the consolidated statements of income for the twelve months ended December 31, 2018, and $19.7 million of financing fees deferred on the balance sheet to be amortized into interest expense over the life of the loans.
Interest rates on the Senior Secured Term Loan B-3 are based on the London Interbank Offered Rate (“LIBOR”), unless otherwise elected, plus a margin of 2.00%. The Company is required to make principal payments at the end of each quarter of 0.25% of the 2017 refinanced principal balance plus additional borrowings with the remaining balance due April 9, 2023. The Company is required to make additional payments based on excess cash flows, as defined in the agreement, of the prior year. Depending on the senior secured net leverage ratio for the year, a principal payment of between zero and fifty percent of the excess cash flows will be due the following year. There were no excess cash flows for 2018 and therefore no payment is required in 2019. Additional payments based on excess cash flows could be due in future years.
On December 31, 2018, we made a prepayment of $60.0 million towards our Senior Secured Term Loan B-3, funded from our cash on hand.
Interest rates on Senior Secured Term Loan A-2 are based on LIBOR, unless otherwise elected, plus a margin of 1.25%, 1.50% or 1.75% depending on our total net leverage ratio. The Company is required to make principal payments of 0.625%, of the 2017 refinanced principal balance plus additional borrowings, at the end of each quarter through September 2019, increasing to 1.25% each quarter thereafter, with the remaining balance due August 9, 2022.
Interest rates on the new Senior Secured Term Loan B-4 are based on LIBOR, unless otherwise elected, plus a margin of 2.00%. We are required to make principal payments on the Senior Secured Term Loan B-4 at the end of each quarter of 0.25% starting in the third quarter of 2018, with the remaining balance due June 19, 2025.
Interest rates on the Senior Secured Revolving Line of Credit are based on LIBOR, unless otherwise elected, plus a margin of 1.25%, 1.50% or 1.75% depending on our total net leverage ratio. There is a 0.20%, 0.25% or 0.30% annual commitment fee, depending on our total net leverage ratio, payable quarterly based on the undrawn portion of the Senior Secured Revolving Line of Credit. The commitment under the Senior Secured Revolving Line of Credit expires on August 9, 2022.
During 2018, we borrowed $125.0 million under the Senior Secured Revolving Line of Credit to partially fund various acquisitions and for general corporate purposes. During the year, we repaid $210.0 million of the borrowing on the Senior Secured Revolving Line of Credit. As of December 31, 2018, the full amount of the $300.0 million revolving credit facility was available for use.
TransUnion also has the ability to request incremental loans on the same terms under the existing senior secured credit facility up to the greater of an additional $675.0 million and 100% of Consolidated EBITDA. Consolidated EBITDA is reduced to the extent that the senior secured net leverage ratio is above 4.25-to-1. In addition, so long as the senior secured net leverage ratio does not exceed 4.25-to-1, we may incur additional incremental loans, subject to certain additional conditions and commitments by existing or new lenders to fund any additional borrowings. 
With certain exceptions, the senior secured credit facility obligations are secured by a first-priority security interest in substantially all of the assets of Trans Union LLC, including its investment in subsidiaries. The senior secured credit facility contains various restrictions and nonfinancial covenants, along with a senior secured net leverage ratio test. The nonfinancial covenants include restrictions on dividends, investments, dispositions, future borrowings and other specified payments, as well as additional reporting and disclosure requirements. The senior secured net leverage test must be met as a condition to incur additional indebtedness, make certain investments, and may be required to make certain restricted payments. The senior secured net leverage ratio must not exceed 5.5-to-1 at any such test date. TransUnion may make dividend payments up to an unlimited amount under the terms of the senior secured credit facility provided that no default or event of default exists and so long as the total net leverage ratio does not exceed 4.75-to-1. As of December 31, 2018, we were in compliance with all debt covenants.
On December 17, 2018, we entered into interest rate swap agreements with various counter-parties that effectively fixes our LIBOR exposure on a portion of our existing senior secured term loans or similar replacement debt at approximately 2.647% to 2.706%. We have designated these swap agreements as cash flow hedges. The current aggregate notional amount under these agreements is $1,450.0 million, decreasing each quarter until the second agreement terminates on December 30, 2022.
On December 18, 2015, we entered into interest rate cap agreements with various counter-parties that effectively cap our LIBOR exposure on a portion of our existing senior secured term loans or similar replacement debt at 0.75% beginning June 30, 2016. We have designated these cap agreements as cash flow hedges. The current aggregate notional amount under these agreements is $1,451.8 million and will continue to decrease each quarter until the agreement terminates on June 30, 2020. In July 2016, we began to pay the various counter-parties a fixed rate on the outstanding notional amounts of between 0.98% and 0.994% and receive payments to the extent LIBOR exceeds 0.75%.
Both the interest rate swaps and interest rate caps are recorded on the balance sheet at fair value. The effective portion of changes in the fair value of the interest rate swaps and interest rate caps is recorded in other comprehensive income (loss). The ineffective portion of changes in the fair value of the swaps and caps is recorded in other income and expense. The ineffective portion of the changes in fair value of the caps, which is due to, and will continue to result from, the cost of financing the cap premium. The effective portion of the change in the fair value of the swaps resulted in an unrealized loss of $8.1 million for the year ended December 31, 2018 recorded in other comprehensive income. We expect to recognize a loss of approximately $1.5 million into interest expense related to the expected LIBOR exceeding the fix rates over the next twelve months. There was no ineffectiveness on the swap for the year. The effective portion of the change in the fair value of the caps resulted in an unrealized gain of $5.7 million, an unrealized gain of $6.2 million, and an unrealized loss of $7.5 million, net of tax, for the years ended December 31, 2018, 2017 and 2016, respectively, recorded in other comprehensive income. The ineffective portion of the change in the fair value of the caps resulted in a gain of $0.7 million, and a loss of $0.3 million and $0.5 million for the years ended December 31, 2018, 2017 and 2016, respectively, recorded in other income and expense.
In accordance with ASC 815, the fair value of the interest rate caps at inception is reclassified from other comprehensive income to interest expense in the same period the interest expense on the underlying hedged debt impacts earnings. Based on how the fair value of interest rate caps are determined, the earlier interest periods have lower fair values at inception than the later interest periods, resulting in less interest expense being recognized in the earlier periods compared with the later periods. Any payments we receive to the extent LIBOR exceeds 0.75% is also reclassified from other comprehensive income to interest expense in the period received. Interest expense reclassified from other comprehensive income to interest expense related to the fair value of the portion of the caps expiring in the twelve-month period of 2018, 2017 and 2016 was a gain of $2.4 million ($1.5 million net of tax), and a loss of $4.3 million ($2.8 million net of tax) and $1.6 million ($1.0 million net of tax), respectively. We expect to reclassify a gain of approximately $6.2 million from other comprehensive income to interest expense related to the fair value of the portion of the caps expiring and payments received to the extent LIBOR exceeds 0.75% in the next twelve months.
Fair Value of Debt
As of December 31, 2018, the fair value of our variable-rate Senior Secured Term Loan A-2, excluding original issue discounts and deferred fees, approximates the carrying value. As of December 31, 2018, the fair value of our Senior Secured Term Loan B-3 and B-4, excluding original issue discounts and deferred fees, was approximately $1,837.4 million and $958.9 million, respectively. The fair values of our variable-rate term loans are determined using Level 2 inputs, and quoted market prices for the publicly traded instruments.