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DEBT AND FINANCING COSTS
 12 Months Ended
Dec. 31, 2023
Debt Disclosure [Abstract]  
DEBT AND FINANCING COSTS DEBT AND FINANCING COSTS
Comprehensive Refinancing 2022
On June 8, 2022, the Partnership completed the private placement of $1.00 billion aggregate principal amount of 5.875% Senior Notes due 2030 (the “2030 Notes”), which are fully and unconditionally guaranteed by the Company. The Notes were issued under our Sustainability-Linked Financing Framework and include certain Sustainability Performance Targets (“SPT”) that the Company needs to meet from and including June 15, 2027.
In addition, the Partnership entered into the revolving credit agreement with Bank of America, N.A. as administrative agent, which provides for a $1.25 billion revolving credit facility (the “Revolving Credit Facility”) maturing on June 8, 2027, and the Term Loan with PNC Bank as administrative agent, which provided for a $2.00 billion senior unsecured term loan credit facility (“Term Loan”) maturing on June 8, 2025, which was amended on December 6, 2023 to extend the maturity date from June 8, 2025 to June 8, 2026, with an additional automatic six-month extension of the amended maturity date to December 8, 2026, at such time as no more than $1.00 billion of an aggregate principal amount of loans under the Term Loan remain outstanding, subject to customary conditions. Both the Revolving Credit Facility and Term Loan include certain “Sustainability Adjustment” features that could result in an interest rate adjustment that depends on the Company meeting the sustainability targets defined in respective agreement.
Proceeds from the Notes and the Term Loan were used to repay all outstanding borrowings under previous credit facilities and to pay fees and expenses related to the offering. The Company recorded a loss on debt extinguishment of $28.0 million for the year ended December 31, 2022.
December 2028 Sustainability-Linked Senior Notes
On December 6, 2023, the Partnership completed a private placement of $500.0 million aggregate principal amount of 6.625% Sustainability-Linked Senior Notes due 2028 (the “Original 2028 Notes”) at par. Further, on December 19, 2023, the Company completed an additional private placement of $300.0 million aggregate principal amount of 6.625% Sustainability-Linked Senior Notes due 2028 (the “Additional 2028 Notes”) at 100.50% of face amount (collectively, the “2028 Notes”). The Original 2028 Notes and the Additional 2028 Notes are treated as a single series of securities under the indenture governing the 2028 Notes, vote together as a single class, and have substantially identical terms, other than the issue date and issue price. The 2028 Notes are fully and unconditionally guaranteed by the Company and issued under our Sustainability-Linked Financing Framework, and include sustainability-linked features described below. Proceeds from the 2028 Notes, together with cash on hand and borrowings under the Partnership’s Revolving Credit Facility, were used to repay a portion of the outstanding borrowings under the Partnership’s existing Term Loan. See additional information regarding the 2023 Term Loan Amendment below.
Interest on the 2028 Notes is payable semi-annually in arrears on June 15 and December 15 of each year, commencing June 15, 2024. The aggregate fees and expenses paid to obtain the 2028 Notes totaled $11.2 million and were capitalized as debt issuance cost and included in the Consolidated Balance Sheets as a direct deduction to the 2028 Notes. The $1.5 million premium was added to the 2028 Notes. The debt issuance cost was amortized and debt premium was accreted to interest expense over the term of the 2028 Notes using the effective interest method.
From and including June 15, 2027, the interest rate accruing on the 2028 Notes will be increased by an additional 0.250% per annum unless the Partnership delivers written notice to the trustee on or before the date that is 15 days prior to June 15, 2027 that the Partnership has satisfied, and an independent external verifier has confirmed satisfaction of the SPT as defined in the indenture governing the 2028 Notes related to three key performance indicators:(1) Reduction of Scope 1 and Scope 2 greenhouse gas emissions intensity, (2) Reduction of Scope 1 and Scope 2 methane gas emissions intensity and (3) female representation in corporate officer positions. If the conditions set forth above have only been satisfied for one or two of the SPTs rather than all three, the interest rate accruing on the 2028 Notes will be increased by an additional 0.0833% per annum for each SPT which has not been satisfied and externally verified on June 15, 2027. If the interest rate accruing on the 2028 Notes is increased in the manner set forth above and the Partnership subsequently delivers written notice to the trustee that it has satisfied the SPTs set forth in clause (1) and (2) above and such satisfaction has been confirmed by an independent external verifier, on or before the date that is 15 days prior to June 15, 2028, the interest rate accruing on the 2028 Notes will be reduced by 0.0833% per annum for each such SPT.
The Partnership may redeem in whole or in part, at a redemption price equal to the Make-Whole-Redemption Price, which is the greater of (1) 100% of the principal amount of the 2028 notes to be redeemed or (2) the present value of the 2028 Notes to be redeemed at such redemption date, prior to December 15, 2025. On or after December 15, 2025, the Partnership may redeem in whole or in part at the redemption price set forth in the indenture agreement governing the 2028 Notes.
Term Loan Amendment 2023
On December 6, 2023, the Partnership, the Company, PNC Bank, and the banks and other financial institutions party thereto, as lenders, entered into a First amendment to Credit Agreement (the “First Amendment”), concurrently with the closing of its 2028 Notes discussed above.
The First Amendment (1) extended the maturity of the Term Loan to June 8, 2026 upon the prepayment of a principal amount of loans under the Term Loan of no less than $500.0 million; and (2) provided for an additional automatic six-month extension of the amended maturity date to December 8, 2026, at such time as no more than $1.00 billion of an aggregate principal amount of loans under the Term Loan remain outstanding, subject to customary conditions. Pursuant to FASB ASC 470-50, Modifications and Extinguishments, the Company determined that the amendment of the maturity date is a modification of the original Term Loan. Fees paid directly to lenders in arranging the modification totaled $1.5 million and were recorded as an original debt discount and included in the Consolidated Balance Sheets as a direct deduction of the Term Loan and was amortized over the modified remaining life of the Term Loan using the effective interest method. Cost incurred with third parties directly related to the modification totaled $0.6 million and were expensed as incurred. Furthermore, the partial paydown of the principal under the Term Loan totaled $800.0 million, using proceeds from the 2028 Notes, resulting in the write off (loss extinguishment) of a proportional amount of the remaining unamortized debt issuance cost and original discount from the Term Loan immediately prior to the paydown. The Company recorded a $1.9 million loss on extinguishment from these write offs in the Consolidated Statements of Operations.
Sustainability Performance Targets
The Partnership’s outstanding debts were 100% linked to sustainability performance targets as of December 31, 2023 and 2022, among which, the Partnership’s 2030 Notes and the 2028 Notes have SPTs that would result in interest rate adjustments starting on June 15, 2027, and the Partnership’s Term Loan and Revolving Credit Facility have SPTs to be met for each calendar year starting in 2022 and onward.
The Partnership delivered a certificate regarding performance of SPTs under the Term Loan and Revolving Credit Facility, which are linked to key performance indicators with respect to methane emission intensity ratio and female officer representation, in 2023. The Company met both SPTs by achieving a reduction of 12.0% of methane emission intensity from 2021 (base year) to 2022, which was 8.7% higher than the respective SPT under the Term Loan and Revolving Credit Facility, and a 17.7% female participation rate in 2022, which was 8.0% higher than the respective SPT under the Term Loan and Revolving Credit Facility. As a result of meeting both SPTs under the Term Loan and Revolving Credit Facility, there was a negative 0.05% sustainability rate adjustment made to both instruments.
Compliance with our Covenants
Both the Revolving Credit Facility with Bank of America, N.A. as administrative agent, and the Term Loan with PNC Bank as administrative agent, contain customary covenants and restrictive provisions which may, among other things, limit the Partnership’s ability to create liens, incur additional indebtedness, make restricted payments, or liquidate, dissolve, consolidate with or merge into or with any other person. The 2030 Notes and the 2028 Notes also contain covenants and restrictive provisions, which may, among other things, limit the Partnership’s and its subsidiaries’ ability to create liens to secure indebtedness and the Partnership’s ability to consolidate or combine with or merge into any other person.
As of December 31, 2023, the Partnership is in compliance with all customary and financial covenants.
Fair Value of Financial Instruments
The fair value of the Company and its subsidiaries’ consolidated debt as of December 31, 2023 and 2022 was $3.57 billion and $3.34 billion, respectively. At December 31, 2023, the 2030 Notes and the 2028 Notes’ fair value were based on Level 1 inputs and the Term Loan and Revolving Credit Facility’s fair value was based on Level 3 inputs.
The following table summarizes the Company’s debt obligations:
December 31,
20232022
(In thousands)
Unsecured term loan
$1,200,000 $2,000,000 
$1.00 billion 2030 senior unsecured notes
1,000,000 1,000,000 
$0.80 billion 2028 senior unsecured notes
800,000 — 
$1.25 billion revolving line of credit
594,000 395,000 
        Total Long-term debt3,594,000 3,395,000 
Deferred debt issuance costs, net(1)
(31,510)(26,490)
Unamortized debt premium and discount, net
319 — 
         Long-term portion of debt, net
$3,562,809 $3,368,510 
(1)Excludes unamortized debt issuance cost related to the Revolving Credit Facility. Unamortized debt issuance cost associated with the Revolving Credit Facility was $5.4 million and $6.9 million as of December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, the current and non-current portion of the unamortized debt issuance costs related to the revolving credit facilities were included in the “Prepaid and other current assets” and “Deferred charges and other assets” of the Consolidated Balance Sheets, respectively.
Interest Income and Financing Costs, Net of Capitalized Interest
The table below presents the components of the Company’s financing costs, net of capitalized interest:
For the Year Ended December 31,
202320222021
(In thousands)
Capitalized interest$(18,270)$(2,747)$(868)
Debt issuance costs6,194 9,569 13,369 
Interest expense217,930 142,430 104,864 
        Total financing costs, net of capitalized interest$205,854 $149,252 $117,365 
As of December 31, 2023 and 2022, unamortized debt issuance costs associated with the 2030 Notes, the 2028 Notes and the Term Loan were $31.5 million and $26.5 million, respectively, and unamortized debt premium and discount, net, associated with the 2028 Notes and Term Loan were $0.3 million and nil, respectively.
The following table reflects future maturities of long-term debt for each of the next five years and thereafter. These amounts exclude approximately $31.2 million in unamortized deferred financing costs, debt premium and discount:
Fiscal YearAmount
(In thousands)
2024$— 
2025— 
20261,200,000 
2027594,000 
2028800,000 
Thereafter1,000,000 
      Total$3,594,000