Note 10 - Debt

The following table provides details of the carrying values of debt as of the dates indicated (in millions):



		December 31,
Description	Maturity Date	2014			2013
Senior secured credit facility:
Revolving loans	October 29, 2018	$	282.7		$	53.0
Term loan	November 21, 2019	250.0			—
4.875% senior notes	March 15, 2023	400.0			400.0
2011 4.0% senior convertible notes	June 15, 2014	—			103.8
2011 4.25% senior convertible notes	December 15, 2014	—			94.5
2009 4.0% senior convertible notes	June 15, 2014	—			9.6
2009 4.25% senior convertible notes	December 15, 2014	—			3.0
Other credit facilities	Varies	1.2			—
Capital lease obligations, weighted average interest rate of 2.8%	In installments through June 13, 2021	176.5			126.0
Notes payable, equipment, weighted average interest rate of 2.8%	In installments through May 1, 2018	24.4			26.9
Total debt		$	1,134.8		$	816.8
Less current maturities		(73.6		)	(51.4		)
Long-term debt		$	1,061.2		$	765.4

Senior Secured Credit Facility

In November 2014, the Company amended its senior secured credit facility, referred to as the Credit Facility. Under the Credit Facility, aggregate borrowing commitments total $1.25 billion, composed of $1.0 billion of revolving commitments and a term loan in the aggregate principal amount of $250 million (the “Term Loan”). The Credit Facility provides the ability to borrow in either Mexican pesos or Canadian dollars, up to an aggregate equivalent amount of $200 million U.S. dollars. Revolving commitments under the Credit Facility mature on October 29, 2018, and the Term Loan matures on November 21, 2019. The Term Loan is subject to amortization in quarterly principal installments of $3.1 million, subject to reduction as a result of the application of certain prepayments in accordance with the terms of the Credit Facility, commencing as of the quarter ending March 31, 2016 and continuing for each fiscal quarter thereafter. The maximum amount available for letters of credit under the Credit Facility is $450 million, of which up to $100 million can be denominated in either Mexican pesos or Canadian dollars. The Credit Facility also provides for swing line loans of up to $75 million. Borrowings under the Credit Facility are used for working capital requirements, capital expenditures and other corporate purposes, including the repurchase or prepayment of indebtedness, equity, joint venture and other investments and share repurchases. The Company used the net proceeds from the Term Loan to repay certain other outstanding indebtedness under the Credit Facility. Approximately $2.5 million of financing costs were incurred in 2014 in connection with amendments to the Credit Facility, including the Term Loan. Deferred financing costs associated with the Credit Facility, including the Term Loan, totaled $6.9 million and $5.8 million, net of accumulated amortization as of December 31, 2014 and 2013, respectively. These deferred costs are included within the consolidated balance sheets as prepaid expenses and other current assets and other long-term assets, as appropriate, and are being amortized over the remaining terms of the Credit Facility and Term Loan.

As of December 31, 2014 and 2013, outstanding revolving loans under the Credit Facility accrued interest at weighted average rates of approximately 2.18% and 2.14% per annum, respectively, and the Term Loan accrued interest at a rate of 1.92% as of December 31, 2014. Letters of credit of approximately $153.6 million and $134.8 million were issued as of December 31, 2014 and 2013, respectively. As of December 31, 2014, letter of credit fees accrued at 0.875% per annum for performance standby letters of credit and at 1.75% per annum for financial standby letters of credit. As of December 31, 2013, letters of credit fees accrued at 0.75% per annum for performance standby letters of credit and at 1.5% per annum for financial standby letters of credit. Outstanding letters of credit mature at various dates and most have automatic renewal provisions, subject to prior notice of cancellation. As of December 31, 2014 and 2013, borrowing capacity of $563.7 million and $562.1 million, respectively, was available for revolving loans, or up to $296.4 million and $315.2 million, respectively, for new letters of credit. The unused facility fee was 0.35% and 0.30% as of December 31, 2014 and 2013, respectively.

Under an “accordion” feature of the Credit Facility, the Company has the option to increase revolving commitments and/or establish additional term loan tranches in an aggregate amount of $250 million. These additional term loan tranches may, subject to certain terms and conditions described in the Credit Facility, rank equal or junior in respect of right of payment and/or collateral to the Credit Facility and may, subject to certain limitations described in the Credit Facility, have terms and pricing that differ from the Credit Facility.

Outstanding revolving loans and the Term Loan under the Credit Facility bear interest, at the Company’s option, at a rate equal to either (a) a Eurocurrency Rate, as defined in the Credit Facility, plus a margin of 1.00% to 2.00% or (b) a Base Rate, plus a margin of 0.00% to 1.00%. The Base Rate equals the highest of (i) the Federal Funds Rate, as defined in the Credit Facility, plus 0.50%, (ii) Bank of America’s prime rate and (iii) the Eurocurrency Rate plus 1.00%. Financial standby letters of credit and commercial letters of credit issued under the Credit Facility are subject to a letter of credit fee of 1.00% to 2.00%, and performance standby letters of credit are subject to a letter of credit fee of 0.50% to 1.00%. The Company must also pay a commitment fee to the lenders of 0.20% to 0.40% on any unused availability under the Credit Facility. In each of the foregoing cases, the applicable margin or fee is based on the Company’s consolidated leverage ratio, as defined in the Credit Facility, as of the then most recent fiscal quarter.

The Credit Facility is guaranteed by certain subsidiaries of the Company (the “Guarantor Subsidiaries”) and the obligations under the Credit Facility are secured by substantially all of the Company’s and the Guarantor Subsidiaries’ respective assets, subject to certain exceptions. Under the Credit Facility, if the “Loan Party EBITDA,” as defined in the Credit Facility, as of the last four consecutive fiscal quarters does not represent at least 70% of the “Adjusted Consolidated EBITDA,” as defined in the Credit Facility, for such period, then the Company must designate additional subsidiaries as Guarantor Subsidiaries, and cause them to join the applicable guaranty and security agreements to the Credit Facility. Additionally, any domestic subsidiary with consolidated EBITDA of at least 15% of the Adjusted Consolidated EBITDA must become a Guarantor Subsidiary and join the applicable guaranty and security agreements.

The Credit Facility requires that the Company maintain a maximum consolidated leverage ratio, as defined in the Credit Facility, of 3.50 and a minimum consolidated interest coverage ratio, as defined in the Credit Facility, of 3.00; however, the Credit Facility provides that, for purposes of calculating the consolidated leverage ratio, funded indebtedness excludes the undrawn standby performance letters of credit. Additionally, subject to certain conditions, if a permitted acquisition or series of permitted acquisitions having consideration exceeding $50 million occurs during a fiscal quarter, the Company has the right to permit the consolidated leverage ratio to exceed 3.50 during such fiscal quarter and the subsequent two fiscal quarters so long as the consolidated leverage ratio does not exceed 3.75 at any time during such period. Such right may be exercised no more than two times during the term of the Credit Facility. Subject to customary exceptions, the Credit Facility limits the borrowers’ and the Guarantor Subsidiaries’ ability to engage in certain activities, including acquisitions, mergers and consolidations, debt incurrence, investments, capital expenditures, asset sales, debt prepayments, lien incurrence and the making of distributions or repurchases of capital stock. However, distributions payable solely in capital stock are permitted. The Credit Facility provides for customary events of default and carries cross-default provisions with the Company’s other significant debt instruments, including the Company’s indemnity agreement with its surety provider, as well as customary remedies upon an Event of Default, as defined in the Credit Facility, including the acceleration of repayment of outstanding amounts and other remedies with respect to the collateral securing the Credit Facility obligations.

The Credit Facility includes a requirement to deliver periodic financial statements to the bank group under the Credit Facility. In connection with the delayed filing of the Company’s Form 10-K for the year ended December 31, 2014 and the Company’s Form 10-Q for the quarter ended March 31, 2015, the Company received consents from its bank group, which extended the delivery date requirements of the Company’s audited consolidated financial statements for the year ended December 31, 2014 and the condensed unaudited consolidated financial statements for the quarter ended March 31, 2015, as well as the delivery date of the Company’s condensed unaudited consolidated financial statements for the quarter ended June 30, 2015, should it be necessary, to September 1, 2015.

Other Credit Facilities. To support the working capital requirements of its foreign operations, the Company entered into certain other credit facilities during the year ended December 31, 2014. Borrowings under these credit facilities, which have varying dates of maturity and are generally renewed on an annual basis, are primarily denominated in Canadian dollars. Maximum borrowing capacity totaled $45.0 million Canadian dollars, or approximately $38.7 million U.S. dollars as of December 31, 2014. Outstanding borrowings totaled approximately $1.2 million U.S. dollars as of December 31, 2014, which accrued interest at a weighted average rate of 4.0%. Outstanding borrowings that are not renewed are repaid with borrowings under the Credit Facility. Accordingly, the carrying amounts of the Company’s borrowings under its other credit facilities are classified within long-term debt in the Company’s consolidated balance sheet as of December 31, 2014. The Company’s other credit facilities are subject to customary provisions and covenants.

Senior Convertible Notes

The Company’s 4.25% Convertible Notes matured and were converted in December 2014. The 2009 4.25% Notes were convertible at a rate of 64.6162 shares of MasTec common stock per $1,000 principal amount thereof, representing a conversion price of approximately $15.48 per share, and resulted in MasTec issuing an aggregate of 0.2 million shares of its common stock. The 2011 4.25% Notes were substantially identical to the 2009 4.25% Notes, except that the 2011 4.25% Notes had an optional physical (share), cash or combination settlement feature. In accordance with the Company’s previously stated intent, it settled the principal amount of the 2011 4.25% Notes in cash, using proceeds from the Credit Facility, and the premium value in shares of common stock. Pursuant to the formula contained in the indenture governing the 2011 4.25% Notes, the Company issued 2.2 million shares of common stock to settle the premium value of the 2011 4.25% Notes. The value of the shares issued to settle the premium was $41.0 million, based on the closing price of the Company’s common stock on the date the shares were issued. The 2.4 million aggregate shares issued in settlement of the 4.25% Convertible Notes were issued from the Company’s treasury stock.

Additionally, the Company’s 4.0% Convertible Notes matured and were converted in June 2014. The 2009 4.0% Notes were convertible at a rate of 63.4417 shares of MasTec common stock per $1,000 principal amount thereof, representing a conversion price of approximately $15.76 per share, and resulted in MasTec issuing an aggregate of 0.6 million shares of its common stock. The 2011 4.0% Notes contained an optional physical (share), cash or combination settlement feature, under which the Company settled the principal amount of the 2011 4.0% Notes in cash, using proceeds from its Credit Facility, and the premium value in shares, which amounted to 3.6 million shares of common stock pursuant to the formula contained in the indenture governing the 2011 4.0% Notes. The value of the shares issued to settle the premium was $114.8 million, based on the closing price of the Company’s common stock on the date the shares were issued. The 4.2 million aggregate shares issued in settlement of the 4.0% Convertible Notes were issued from the Company’s treasury stock.

4.875% Senior Notes and 7.625% Senior Notes

On March 18, 2013, the Company issued $400 million of 4.875% Senior Notes due March 15, 2023 in a registered public offering. Interest on the 4.875% Senior Notes is payable on March 15 and September 15 of each year, and commenced on September 15, 2013. The 4.875% Senior Notes are senior unsecured unsubordinated obligations and rank equal in right of payment with existing and future unsubordinated debt, and rank senior in right of payment to existing and future subordinated debt and are fully and unconditionally guaranteed on an unsecured, unsubordinated, joint and several basis by certain of the Company’s existing and future 100%-owned direct and indirect domestic subsidiaries that are each guarantors of the Credit Facility or other outstanding indebtedness. See Note 20 - Supplemental Guarantor Condensed Consolidating Financial Information. The 4.875% Senior Notes are effectively junior to MasTec’s secured debt, including the Credit Facility and the Term Loan, to the extent of the value of the assets securing that debt.

The 4.875% Senior Notes include a requirement to file with the SEC annual and quarterly reports. In connection with the delayed filing of the Company’s Form 10-K for the year ended December 31, 2014 and Form 10-Q for the quarterly period ended March 31, 2015, the Company received a consent from the holders of the 4.875% Senior Notes (the “Note Holders”) that extended these reporting requirements to August 1, 2015. The Company paid a 25 basis point fee, or $0.9 million, to its Note Holders, and a 20 basis point fee, or $0.8 million, to the solicitation agent in connection with this consent. The Note Holders’ fee and solicitation agent’s fee were recorded within deferred financing costs and interest expense, respectively, in the second quarter of 2015. At the Company’s sole discretion, it can extend the delivery date for its required reports to November 1, 2015 subject to the Company’s payment to the Note Holders of an additional fee of 25 basis points, or $0.9 million.

The Company has the option to redeem all or a portion of the 4.875% Senior Notes at any time on or after March 15, 2018 at the redemption prices set forth in the indenture that governs the 4.875% Senior Notes (the “4.875% Senior Notes Indenture”) plus accrued and unpaid interest, if any, to the redemption date. At any time prior to March 15, 2018, the Company may redeem all or a part of the 4.875% Senior Notes at a redemption price equal to 100% of the principal amount of 4.875% Senior Notes redeemed plus an applicable premium, as defined in the 4.875% Senior Notes Indenture, together with accrued and unpaid interest, if any, to the redemption date. In addition, at any time prior to March 15, 2016, the Company may redeem up to 35% of the principal amount of the 4.875% Senior Notes using the net cash proceeds of one or more sales of the Company’s capital stock, as defined in the 4.875% Senior Notes Indenture, at a redemption price of 104.875% of the principal amount, plus accrued and unpaid interest to the redemption date.

The 4.875% Senior Notes Indenture, among other things, generally limits the ability of the Company and certain of its subsidiaries, subject to certain exceptions, to (i) incur additional debt and issue preferred stock, (ii) create liens, (iii) pay dividends, acquire shares of capital stock, make payments on subordinated debt or make investments, (iv) place limitations on distributions from certain subsidiaries, (v) issue guarantees, (vi) issue or sell the capital stock of certain subsidiaries, (vii) sell assets, (viii) enter into transactions with affiliates and (ix) effect mergers. The 4.875% Senior Notes Indenture provides for customary events of default, as well as customary remedies upon an event of default, as defined in the 4.875% Senior Notes Indenture, including acceleration of repayment of outstanding amounts.

Approximately $7.7 million in financing costs were incurred in connection with the issuance of the 4.875% Senior Notes. These deferred financing costs, which totaled $6.3 million and $7.1 million, net of accumulated amortization as of December 31, 2014 and 2013, respectively, are included within the consolidated balance sheets as prepaid expenses and other current assets and other long-term assets, as appropriate, and are being amortized over the term of the 4.875% Senior Notes using the effective interest method. The Company used a portion of the proceeds from the 4.875% Senior Notes offering to fund the repurchase and redemption of the Company’s $150 million principal amount of the Company’s 7.625% senior notes due 2017 (the “7.625% Senior Notes”). The remaining net proceeds were used for working capital and other general corporate purposes.

In connection with the issuance of the 4.875% Senior Notes, the Company repurchased approximately $121.1 million of its 7.625% Senior Notes on March 18, 2013 in a tender offer at a price of 102.792% of the principal amount, which included an early tender payment of $30.00 per $1,000 principal amount of notes tendered. The holders of the tendered 7.625% Senior Notes also received accrued interest from the most recent interest payment date to, but not including, the date of repurchase. In addition, on March 29, 2013, the Company redeemed the remaining outstanding $28.9 million aggregate principal amount of the 7.625% Senior Notes in accordance with their terms at a price of 102.542% of the principal amount plus accrued interest from the most recent interest payment date to, but not including, the date of redemption. A pre-tax debt extinguishment loss of $5.6 million was recognized during the year ended December 31, 2013 in connection with the repurchase and redemption of the 7.625% Senior Notes, including $4.1 million of early payment premiums and $1.5 million of unamortized deferred financing costs. This loss was separately disclosed within the consolidated statements of operations.

Acquisition Debt

In connection with certain acquisitions, the Company has entered into or assumed certain debt and/or capital lease obligations. As of December 31, 2014 and 2013, $20.2 million and $9.8 million, respectively, of acquisition-related debt remained outstanding.

Debt Covenants

MasTec was in compliance with the provisions and covenants contained in its outstanding debt instruments as of December 31, 2014 and 2013.

Contractual Maturities of Debt and Capital Lease Obligations

Contractual maturities of MasTec’s debt and capital lease obligations as of December 31, 2014 were as follows (in millions):



2015	$	73.6
2016	71.1
2017	53.1
2018	318.5
2019	218.0
Thereafter	400.5
Total	$	1,134.8

Interest Expense, Net

The following table provides details of interest expense, net, for the periods indicated (in millions):



	For the Years Ended December 31,
	2014			2013			2012
Interest expense:
Contractual and other interest expense	$	43.5		$	37.6		$	29.2
Accretion of senior convertible note discount	4.0			5.2			4.9
Amortization of deferred financing costs	3.4			4.0			3.7
Total interest expense	$	50.9		$	46.8		$	37.8
Interest income	(0.1		)	(0.4		)	(0.4		)
Interest expense, net	$	50.8		$	46.4		$	37.4

As of December 31, 2014 and 2013, accrued interest payable, which is recorded within other accrued expenses in the consolidated balance sheets, totaled $7.4 million, and $7.3 million, respectively.