Debt and Capital Lease Obligations

9 Months Ended

Sep. 30, 2018

Debt and Capital Lease Obligations [Abstract]

Debt and Capital Lease Obligations

Debt and Capital Lease Obligations

The U.S. dollar equivalents of the components of our debt are as follows:

	September 30, 2018									Principal amount
	Weighted average interest rate (a)		Unused borrowing capacity (b)			Estimated fair value (c)
			Borrowing currency	U.S. $ equivalent		September 30, 2018		December 31, 2017		September 30, 2018		December 31, 2017
			in millions
VM Notes	5.47	%	—	$	—	$	8,995.9	$	9,987.4	$	8,833.7	$	9,565.7
VM Credit Facilities (d)	4.63	%	(e)	880.3		5,190.1		4,681.5		5,164.4		4,676.2
UPCB SPE Notes	4.53	%	—	—		2,485.3		2,638.8		2,464.0		2,582.6
UPC Holding Bank Facility	4.66	%	990.1	1,149.9		1,645.2		2,576.4		1,645.0		2,576.1
UPC Holding Senior Notes	4.59	%	—	—		1,185.1		1,272.5		1,225.2		1,313.4
Telenet Credit Facility	4.04	%	(f)	516.8		2,442.8		2,188.9		2,447.8		2,177.6
Telenet Senior Secured Notes	4.68	%	—	—		1,638.5		1,724.4		1,696.8		1,721.3
Telenet SPE Notes	4.88	%	—	—		601.1		1,014.4		554.0		937.7
Vendor financing (g)	3.95	%	—	—		2,943.5		3,599.0		2,943.5		3,599.0
ITV Collar Loan	0.68	%	—	—		1,386.1		1,445.8		1,411.6		1,463.8
Derivative-related debt instruments (h)	3.42	%	—	—		327.9		359.8		328.8		361.5
Sumitomo Share Loan (i)	—		—	—		—		621.7		—		621.7
Sumitomo Collar Loan	—		—	—		—		170.3		—		169.1
Other (j)	5.14	%	—	—		478.7		413.4		483.7		418.2
Total debt before deferred financing costs, discounts and premiums	4.57	%		$	2,547.0	$	29,320.2	$	32,694.3	$	29,198.5	$	32,183.9

The following table provides a reconciliation of total debt before deferred financing costs, discounts and premiums to total debt and capital lease obligations:

	September 30, 2018			December 31, 2017
	in millions
Total debt before deferred financing costs, discounts and premiums	$	29,198.5		$	32,183.9
Deferred financing costs, discounts and premiums, net	(130.3		)	(171.8		)
Total carrying amount of debt	29,068.2			32,012.1
Capital lease obligations (k)	663.2			691.4
Total debt and capital lease obligations	29,731.4			32,703.5
Current maturities of debt and capital lease obligations	(3,499.4		)	(3,680.1		)
Long-term debt and capital lease obligations	$	26,232.0		$	29,023.4

_______________

(a) Represents the weighted average interest rate in effect at September 30, 2018 for all borrowings outstanding pursuant to each debt instrument, including any applicable margin. The interest rates presented represent stated rates and do not include the impact of derivative instruments, deferred financing costs, original issue premiums or discounts and commitment fees, all of which affect our overall cost of borrowing. Including the effects of derivative instruments, original issue premiums or discounts and commitment fees, but excluding the impact of deferred financing costs, our weighted average interest rate on

our aggregate variable- and fixed-rate indebtedness was 4.30% at September 30, 2018. For information regarding our derivative instruments, see note 6.

(b) Unused borrowing capacity represents the maximum availability under the applicable facility at September 30, 2018 without regard to covenant compliance calculations or other conditions precedent to borrowing. At September 30, 2018, based on the most restrictive applicable leverage covenants, the full amount of unused borrowing capacity was available to be borrowed under each of the respective subsidiary facilities, and based on the most restrictive applicable leverage-based restricted payment tests, there were no restrictions on the respective subsidiary's ability to make loans or distributions from this availability to Liberty Global or its subsidiaries or other equity holders. Upon completion of the relevant September 30, 2018 compliance reporting requirements, we expect that the full amount of unused borrowing capacity will continue to be available and that there will be no restrictions with respect to loans or distributions. Our above expectations do not consider any actual or potential changes to our borrowing levels or any amounts loaned or distributed subsequent to September 30, 2018. For information regarding certain transactions completed subsequent to September 30, 2018 that could have an impact on the availability to be borrowed, loaned or distributed, see the below discussion under Telenet Financing Transactions and note 17.

(c) The estimated fair values of our debt instruments are generally determined using the average of applicable bid and ask prices (mostly Level 1 of the fair value hierarchy) or, when quoted market prices are unavailable or not considered indicative of fair value, discounted cash flow models (mostly Level 2 of the fair value hierarchy). The discount rates used in the cash flow models are based on the market interest rates and estimated credit spreads of the applicable entity, to the extent available, and other relevant factors. For additional information regarding fair value hierarchies, see note 7.

(d) Amounts include £452.8 million ($590.5 million) and £43.6 million ($56.9 million) at September 30, 2018 and December 31, 2017, respectively, of borrowings pursuant to excess cash facilities under the VM Credit Facilities. These borrowings are owed to certain non-consolidated special purpose financing entities that have issued notes to finance the purchase of receivables due from Virgin Media to certain other third parties for amounts that Virgin Media and its subsidiaries have vendor financed. To the extent that the proceeds from these notes exceed the amount of vendor financed receivables available to be purchased, the excess proceeds are used to fund these excess cash facilities.

(e) Unused borrowing capacity under the VM Credit Facilities relates to multi-currency revolving facilities with an aggregate maximum borrowing capacity equivalent to £675.0 million ($880.3 million). In February 2018, the VM Revolving Facility was amended and split into two revolving facilities. As of September 30, 2018, VM Revolving Facility A was a multi-currency revolving facility maturing on December 31, 2021 with a maximum borrowing capacity equivalent to £75.0 million ($97.8 million), and VM Revolving Facility B was a multi-currency revolving facility maturing on January 15, 2024 with a maximum borrowing capacity equivalent to £600.0 million ($782.5 million). In October 2018, the VM Credit Facilities were further amended whereby the maximum borrowing capacities of VM Revolving Facility A and VM Revolving Facility B were adjusted to an equivalent of £50.0 million ($65.2 million) and £625.0 million ($815.1 million), respectively. All other terms from the previously existing VM Revolving Facilities continue to apply to the new revolving facilities.

(f) Unused borrowing capacity under the Telenet Credit Facility comprises (i) €400.0 million ($464.6 million) under Telenet Facility AG, (ii) €25.0 million ($29.0 million) under the Telenet Overdraft Facility and (iii) €20.0 million ($23.2 million) under the Telenet Revolving Facility, each of which were undrawn at September 30, 2018.

(g) Represents amounts owed pursuant to interest-bearing vendor financing arrangements that are used to finance certain of our property and equipment additions and, to a lesser extent, certain of our operating expenses. These obligations are generally due within one year and include VAT that was paid on our behalf by the vendor. Repayments of vendor financing obligations are included in repayments and repurchases of debt and capital lease obligations in our condensed consolidated statements of cash flows.

(h) Represents amounts associated with certain derivative-related borrowing instruments, including $274.1 million and $304.9 million at September 30, 2018 and December 31, 2017, respectively, carried at fair value. These instruments mature at various dates through January 2025. For information regarding fair value hierarchies, see note 7.

(i) In August 2018, we settled the outstanding amount under the Sumitomo Share Loan with the remaining shares of Sumitomo that were held by our company.

(j) Amounts include $231.2 million and $160.9 million at September 30, 2018 and December 31, 2017, respectively, of debt collateralized by certain trade receivables of Virgin Media.

(k) The U.S. dollar equivalents of our consolidated capital lease obligations are as follows:

	September 30, 2018		December 31, 2017
	in millions
Telenet	$	464.9	$	456.1
UPC Holding	78.0		89.0
Virgin Media	70.9		79.1
Other subsidiaries	49.4		67.2
Total	$	663.2	$	691.4

Financing Transactions - General Information

At September 30, 2018, most of our outstanding debt had been incurred by one of our three subsidiary “borrowing groups.” References to these borrowing groups, which comprise Virgin Media, UPC Holding and Telenet, include their respective restricted parent and subsidiary entities. Below we provide summary descriptions of any financing transactions completed during the first nine months of 2018. A significant portion of our financing transactions include non-cash borrowings and repayments. During the nine months ended September 30, 2018 and 2017, non-cash borrowings and repayments aggregated $2,583.3 million and $6,546.2 million, respectively. Unless otherwise noted, the terms and conditions of any new notes and/or credit facilities are largely consistent with those of existing notes and credit facilities of the corresponding borrowing group with regard to covenants, events of default and change of control provisions, among other items. For information regarding the general terms and conditions of our debt and capitalized terms not defined herein, see note 10 to the consolidated financial statements included in our 10-K.

Virgin Media Financing Transactions

In August 2018, Virgin Media redeemed (i) $190.0 million of the $530.0 million outstanding principal amount of the 2023 VM Dollar Senior Notes and (ii) in full the £250.0 million ($326.0 million) outstanding principal amount of the 2023 VM Sterling Senior Notes. This transaction was funded with a portion of the proceeds received by another Liberty Global subsidiary in connection with the sale of UPC Austria, as described in note 4. In connection with this transaction, Virgin Media recognized a loss on debt modification and extinguishment, net, of $22.2 million related to (a) the payment of $17.2 million of redemption premiums and (b) the write-off of $5.0 million of unamortized deferred financing costs and discounts.

For information regarding a financing transaction completed by Virgin Media subsequent to September 30, 2018, see note 17.

Telenet Financing Transactions

In March 2018, Telenet used existing cash to prepay 10% of the €530.0 million ($615.5 million) outstanding principal amount under Telenet Facility AB, together with accrued and unpaid interest and the related prepayment premiums, which was owed to Telenet Finance VI and, in turn, Telenet Finance VI used such proceeds to redeem 10% of the €530.0 million outstanding principal amount of the Telenet Finance VI Notes. In connection with this transaction, Telenet recognized a loss on debt modification and extinguishment, net, of $2.6 million related to (i) the payment of $2.0 million of redemption premiums and (ii) the write-off of $0.6 million of unamortized deferred financing costs and discounts.

In March 2018, commitments under Telenet Facility AL were increased by $300.0 million (the Telenet Facility AL Add-on). The terms of the Telenet Facility AL Add-on are consistent with those of Telenet Facility AL. In April 2018, Telenet drew the full $300.0 million of the Telenet Facility AL Add-on and used the net proceeds, together with existing cash, to prepay in full the €250.0 million ($290.3 million) outstanding principal amount under Telenet Facility V, together with accrued and unpaid interest and the related prepayment premiums, which was owed to Telenet Finance V and, in turn, Telenet Finance V used such proceeds to redeem in full the €250.0 million outstanding principal amount of the Telenet Finance V Notes. In connection with this transaction, Telenet recognized a loss on debt modification and extinguishment, net, of $21.3 million related to (i) the payment of $17.3 million of redemption premiums and (ii) the write-off of $4.0 million of unamortized deferred financing costs and discounts.

In May 2018, Telenet entered into (i) a $1,600.0 million term loan facility (Telenet Facility AN), which was issued at 99.875% of par, matures on August 15, 2026, bears interest at a rate of LIBOR + 2.25% and is subject to a LIBOR floor of 0.0%, and (ii) a €730.0 million ($847.8 million) term loan facility (Telenet Facility AO), which was issued at 99.875% of par, matures on December 15, 2027, bears interest at a rate of EURIBOR + 2.50% and is subject to a EURIBOR floor of 0.0%. The net proceeds from Telenet Facility AN and Telenet Facility AO, together with existing cash, were used to prepay in full (a) the $1,300.0 million outstanding principal amount under Telenet Facility AL, (b) the $300.0 million outstanding principal amount under the Telenet Facility AL Add-on and (c) the €730.0 million outstanding principal amount under Telenet Facility AM. In connection with these transactions, Telenet recognized a loss on debt modification and extinguishment, net, of $7.6 million related to the write-off of unamortized deferred financing costs and discounts.

In August 2018, commitments under Telenet Facility AN and Telenet Facility AO were increased by $475.0 million (the Telenet Facility AN Add-on) and €205.0 million ($238.1 million) (the Telenet Facility AO Add-on), respectively. The Telenet Facility AN Add-on and the Telenet Facility AO Add-on were issued at 98.5% and 98.0% of par, respectively. All other terms of the Telenet Facility AN Add-on and the Telenet Facility AO Add-on are consistent with those of Telenet Facility AN and Telenet Facility AO, respectively. The Telenet Facility AN Add-on and the Telenet Facility AO Add-on were drawn in October 2018, and the net proceeds were used to make an aggregate dividend payment to Telenet shareholders (including Liberty Global) of €600.0 million ($696.8 million).

UPC Holding Financing Transactions

In August 2018, UPC Holding (i) repaid $330.0 million of the $1,975.0 million outstanding principal amount under UPC Facility AR, (ii) repaid in full the €500.0 million ($580.7 million) outstanding principal amount under UPC Facility AS and (iii) redeemed €60.0 million ($69.7 million) of the €600.0 million ($696.8 million) outstanding principal amount under UPC Facility AK, together with accrued and unpaid interest and the related prepayment premiums, which was owed to UPCB Finance IV and, in turn, UPCB Finance IV used such proceeds to redeem €60.0 million of the €600.0 million outstanding principal amount of the UPCB Finance IV Euro Notes. These transactions were funded with a portion of the proceeds received by another Liberty Global subsidiary in connection with the sale of UPC Austria, as described in note 4. In connection with this transaction, UPC Holding recognized a loss on debt modification and extinguishment, net, of $8.9 million related to (a) the write-off of $6.9 million of unamortized deferred financing costs and discounts and (b) the payment of $2.0 million of redemption premiums.

Maturities of Debt and Capital Lease Obligations

Maturities of our debt and capital lease obligations as of September 30, 2018 are presented below for the named entity and its subsidiaries, unless otherwise noted. Amounts presented below represent U.S. dollar equivalents based on September 30, 2018 exchange rates:

Debt:

	Virgin Media			UPC Holding (a)			Telenet (b)			Other			Total
	in millions
Year ending December 31:
2018 (remainder of year)	$	677.8		$	118.2		$	157.8		$	6.5		$	960.3
2019	1,745.1			413.4			267.3			53.1			2,478.9
2020	15.7			23.1			14.2			214.7			267.7
2021	1,340.3			24.0			12.2			981.8			2,358.3
2022	366.7			21.2			12.1			327.6			727.6
2023	435.0			16.9			13.2			—			465.1
Thereafter	11,818.1			5,334.2			4,788.3			—			21,940.6
Total debt maturities	16,398.7			5,951.0			5,265.1			1,583.7			29,198.5
Deferred financing costs, discounts and premiums, net	(45.5		)	(41.5		)	(20.9		)	(22.4		)	(130.3		)
Total debt	$	16,353.2		$	5,909.5		$	5,244.2		$	1,561.3		$	29,068.2
Current portion	$	2,420.7		$	528.8		$	407.2		$	57.3		$	3,414.0
Noncurrent portion	$	13,932.5		$	5,380.7		$	4,837.0		$	1,504.0		$	25,654.2

_______________

(a) Amounts include certain senior secured notes issued by special purpose financing entities that are consolidated by UPC Holding and Liberty Global.

(b) Amounts include certain senior secured notes issued by special purpose financing entities that are consolidated by Telenet and Liberty Global.

Capital lease obligations:

	Telenet			UPC Holding			Virgin Media			Other			Total
	in millions
Year ending December 31:
2018 (remainder of year)	$	23.9		$	4.7		$	4.6		$	8.0		$	41.2
2019	78.1			14.5			11.5			13.6			117.7
2020	74.6			15.2			8.6			8.7			107.1
2021	70.5			15.6			8.8			4.6			99.5
2022	70.5			12.7			10.9			3.0			97.1
2023	59.0			11.8			6.5			18.1			95.4
Thereafter	240.4			20.3			194.0			—			454.7
Total principal and interest payments	617.0			94.8			244.9			56.0			1,012.7
Amounts representing interest	(152.1		)	(16.8		)	(174.0		)	(6.6		)	(349.5		)
Present value of net minimum lease payments	$	464.9		$	78.0		$	70.9		$	49.4		$	663.2
Current portion	$	52.4		$	9.4		$	8.5		$	15.1		$	85.4
Noncurrent portion	$	412.5		$	68.6		$	62.4		$	34.3		$	577.8