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Debt
12 Months Ended
Dec. 31, 2015
Debt Disclosure [Abstract]  
Debt
Debt
As of December 31, 2015 and 2014, our outstanding debt included in our consolidated balance sheets totaled $3,360 million and $3,062 million, respectively, net of debt issuance costs of $30 million and $21 million, respectively, and unamortized discounts of $6 million and $13 million, respectively. The following table sets forth the face values of our outstanding debt as of December 31, 2015 and 2014 (in thousands):
 
 
 
 
 
December 31,
 
Rate
 
Maturity
 
2015
 
2014
Senior secured credit facilities:
 
 
 
 
 

 
 

Term Loan B
L + 3.00%
 
February 2019
 
$
1,721,750

 
$
1,739,500

Incremental term loan facility
L + 3.00%
 
February 2019
 
342,125

 
345,625

Term Loan C
L + 2.50%
 
December 2017
 
49,313

 
49,313

Revolver, $370 million
L + 3.25%
 
February 2019
 

 

Revolver, $35 million
L + 3.25%
 
February 2018
 

 

Senior unsecured notes due 2016
8.35%
 
March 2016
 
165,000

 
400,000

Senior secured notes due 2019
8.50%
 
May 2019
 

 
480,000

5.375% senior secured notes due 2023
5.375%
 
April 2023
 
530,000

 

5.25% senior secured notes due 2023
5.25%
 
November 2023
 
500,000

 

Mortgage facility
5.80%
 
March 2017
 
80,984

 
82,168

Capital lease obligations
 
 
 
 
6,502

 

Face value of total debt outstanding
 
 
 
 
3,395,674

 
3,096,606

Less current portion of debt outstanding
 
 
 
 
(190,687
)
 
(22,435
)
Face value of long-term debt outstanding
 
 
 
 
$
3,204,987

 
$
3,074,171


In the fourth quarter of 2015, we adopted ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, and therefore present debt issuance costs as a reduction to long-term debt in our consolidated balance sheets as of December 31, 2015 and 2014. Debt issuance costs are amortized to interest expense over the term of the associated debt arrangement.
Senior Secured Credit Facilities
Our senior secured credit facilities, as amended (“Amended and Restated Credit Agreement”), consist of term loans of $1,775 million (“Term Loan B”), $350 million (“Incremental Term Loan Facility”) and $425 million (the “Term Loan C”). The Amended and Restated Credit Agreement also provides for a revolving credit facility totaling $405 million, of which $370 million expires in February 2019 (“Extended Revolver”) and $35 million expires in February 2018 (“Unextended Revolver,” collectively, the “Revolver”). We had no outstanding balance under the Extended or Unextended Revolver as of December 31, 2015 and 2014. We had outstanding letters of credit totaling $25 million and $47 million as of December 31, 2015 and 2014, respectively, which reduce our overall credit capacity under the Revolver.
Sabre GLBL obligations under the Amended and Restated Credit Agreement are guaranteed by Sabre Holdings and each of Sabre GLBL’s wholly-owned material domestic subsidiaries, except unrestricted subsidiaries. We refer to these guarantors together with Sabre GLBL, as the Loan Parties. The Amended and Restated Credit Agreement is secured by (i) a first priority security interest on the equity interests in Sabre GLBL and each other Loan Party that is a direct subsidiary of Sabre GLBL or another Loan Party, (ii) 65% of the issued and outstanding voting (and 100% of the non-voting) equity interests of each wholly-owned material foreign subsidiary of Sabre GLBL that is a direct subsidiary of Sabre GLBL or another Loan Party, and (iii) a blanket lien on substantially all of the tangible and intangible assets of the Loan Parties.
Under the Amended and Restated Credit Agreement, the Loan Parties are subject to certain customary non-financial covenants, as well as a maximum Senior Secured Leverage Ratio, which applies if our Revolver utilization exceeds certain thresholds and is calculated as Senior Secured Debt (net of cash) to EBITDA, as defined by the agreement. This ratio was 5.0 to 1.0 for 2014 and is 4.5 to 1.0 for 2015. The definition of EBITDA is based on a trailing twelve months EBITDA adjusted for certain items including non-recurring expenses and the pro forma impact of cost saving initiatives. As of December 31, 2015, we are in compliance with all covenants under the Amended and Restated Credit Agreement.
Principal Payments
Term Loan B and the Incremental Term Loan Facility mature on February 19, 2019, and require principal payments in equal quarterly installments of 0.25%. Term Loan C matures on December 31, 2017. As a result of the April 2014 prepayment, quarterly principal payments on Term Loan C are no longer required. We are obligated to pay $17 million on September 30, 2017 and the remaining balance on December 31, 2017. For the year ended December 31, 2015, we made $21 million of principal payments.
We are also required to pay down the term loans by an amount equal to 50% of annual excess cash flow, as defined in our Amended and Restated Credit Agreement. This percentage requirement may decrease or be eliminated if certain leverage ratios are achieved. Based on our results for the year ended December 31, 2015, we are not required to make an excess cash flow payment in 2016. In the event of certain asset sales or borrowings, the Amended and Restated Credit Agreement requires that we pay down the term loans with the resulting proceeds. Subject to the repricing premium discussed above, we may repay the indebtedness at any time prior to the maturity dates without penalty.
Interest
Borrowings under the Amended and Restated Credit Agreement bear interest at a rate equal to either, at our option: (i) the Eurocurrency rate plus an applicable margin for Eurocurrency borrowings as set forth below, or (ii) a base rate determined by the highest of (1) the prime rate of Bank of America, (2) the federal funds effective rate plus 1/2% or (3) LIBOR plus 1.00%, plus an applicable margin for base rate borrowings as set forth below. The Eurocurrency rate is based on LIBOR for all U.S. dollar borrowings and has a floor. We have elected the three-month LIBOR as the floating interest rate on all of our outstanding term loans. Interest payments are due on the last day of each quarter. Interest on a portion of the outstanding loan is hedged with interest rate swaps (see Note 9, Derivatives).
 
Eurocurrency borrowings
 
Base rate borrowings
 
Applicable Margin(1)
 
Floor
 
Applicable Margin
 
Floor
Term Loan B, prior to Repricing Amendments
4.00%
 
1.25%
 
3.00%
 
2.25%
Term Loan B, subsequent to Repricing Amendments
3.25%
 
1.00%
 
2.25%
 
2.00%
Incremental term loan facility
3.50%
 
1.00%
 
2.50%
 
2.00%
Term Loan C
3.00%
 
1.00%
 
2.00%
 
2.00%
Revolver, $370 million
3.00%
 
N/A
 
2.00%
 
N/A
Revolver, $35 million
3.75%
 
N/A
 
2.75%
 
N/A
________________________
(1)
Applicable margins do not reflect potential step downs which are determined by the Senior Secured Leverage Ratio. See below for additional information.
Applicable margins for Term Loan B and the Extended Revolver step down 25 basis points for any quarter if the Senior Secured Leverage Ratio is less than or equal to 3.25 to 1.00. Applicable margins for all other borrowings under the Amended and Restated Credit Agreement step down by 50 basis points for any quarter if the Senior Secured Leverage Ratio is less than or equal to 3.0 to 1.0. Applicable margins increase to maintain a difference of not more than 50 basis points relative to future term loan extensions or refinancings. In addition, we are required to pay a quarterly commitment fee of 0.375% per annum for unused revolving commitments. The commitment fee may increase to 0.5% per annum if the Senior Secured Leverage Ratio is greater than 4.0 to 1.0.
Our effective interest rates on borrowings under the Amended and Restated Credit Agreement for the years ended December 31, 2015, 2014 and 2013, inclusive of amounts charged to interest expense, are as follows:
 
Year Ended December 31,
 
2015
 
2014
 
2013
Including the impact of interest rate swaps
4.48
%
 
5.43
%
 
6.86
%
Excluding the impact of interest rate swaps
4.48
%
 
4.89
%
 
6.21
%

Extinguishments and Amendments
In April 2014, we completed an initial public offering of our common stock and utilized the net proceeds to repay (i) $296 million aggregate principal amount of our Term Loan C and (ii) $320 million aggregate principal amount of our senior secured notes due 2019 (“2019 Notes”) at a redemption price of 108.5% of the principal amount. As a result of the prepayments on Term Loan C and the 2019 Notes, we recorded an extinguishment loss of $31 million which includes a $27 million redemption premium on the 2019 Notes.
In February 2014, we entered into a series of amendments to our Amended and Restated Credit Agreement (“Repricing Amendments”) which, among other amendments, reduced the applicable interest margins for Term Loan B and certain portions of the Revolver. The Repricing Amendments also extended the maturity date of the Extended Revolver and increased the availability under the Revolver from $352 million to $405 million. As a result of the Repricing Amendments, we recorded a $3 million loss on the extinguishment of debt.
In 2013, we amended and restated our senior secured credit facilities to replace our then existing initial term loans with new classes of term loans. We also entered into an agreement for an incremental term loan facility to Term Loan B which provided total net proceeds of $350 million due February 2019. As a result of the amendment and restatement of our senior secured credit facilities, we recorded a loss on extinguishment of debt of $12 million.
Senior Secured Notes due 2023
In April 2015, we issued $530 million senior secured notes due in April 2023 with a stated interest rate of 5.375% and received proceeds of $522 million, net of underwriting fees and commissions. We used the proceeds to redeem all of the $480 million principal of the 2019 Notes, pay the 6.375% redemption premium of $31 million and a make whole premium of $2 million, resulting in an extinguishment loss of $33 million. The remaining proceeds, combined with cash on hand, were used to pay accrued but unpaid interest of $19 million.
In November 2015, we issued $500 million senior secured notes due in 2023 with a stated interest rate of 5.25%. The net proceeds of $494 million, net of underwriting fees and commissions, were used to repay $235 million of the $400 million 2016 Notes (as defined below), pay a $5 million make-whole premium on the 2016 Notes and pay $5 million of accrued but unpaid interest. In addition, we used the net proceeds to repurchase 3,400,000 shares of our common stock totaling $99 million. The excess net proceeds, together with cash on hand, were applied to fund the acquisition of the Trust Group, which was completed in January 2016. As a result of the prepayment on the 2016 Notes, we recorded an extinguishment loss of $6 million, which includes $1 million of unamortized discount and the make-whole premium.
The senior secured notes due 2023 were issued by Sabre GLBL and are guaranteed by Sabre Holdings and each of Sabre GLBL’s existing and subsequently acquired or organized subsidiaries that are borrowers under or guarantors of our senior secured credit facilities. The senior secured notes due 2023 are secured by a first priority security interest in substantially all present and after acquired property and assets of Sabre GLBL and the guarantors of the notes, which also constitutes collateral securing indebtedness under our senior secured facilities on a first priority basis.
Senior Unsecured Notes due 2016
As of December 31, 2015, we have, at face value, $165 million in senior unsecured notes currently bearing interest at a rate of 8.35% and maturing on March 15, 2016 (“2016 Notes”). In December 2015, we repaid $235 million in aggregate principal on the 2016 Notes with proceeds from the issuance of the 5.25% senior secured notes due in 2023. The 2016 Notes include certain non-financial covenants, including restrictions on incurring certain types of debt, entering into certain sale and leaseback transactions. We issued the 2016 Notes in March 2006 and used all of the net proceeds plus available cash and cash equivalents and marketable securities to prepay $400 million of a bridge facility used to finance the acquisition of lastminute.com. As of December 31, 2015, we are in compliance with all covenants under the indenture for the 2016 Notes.
Mortgage Facility
We have $81 million outstanding under a mortgage facility for the buildings, land and furniture and fixtures located at our headquarters facilities in Southlake, Texas. The mortgage facility bears interest at a rate of 5.7985% per annum and matures on April 1, 2017. The mortgage facility includes certain customary non-financial covenants, including restrictions on incurring liens other than permitted liens, dissolving the borrower or changing our business, forgiving debt, changing our principal place of business and transferring the property. As of December 31, 2015, we are in compliance with all covenants under the mortgage facility.
Aggregate Maturities
As of December 31, 2015, aggregate maturities of our long-term debt were as follows (in thousands):
 
Amount
Years Ending December 31,
 

2016
$
190,687

2017
152,095

2018
21,745

2019
2,000,191

2020
956

Thereafter
1,030,000

Total
$
3,395,674