6. DEBT AND INTEREST

The following table provides the components of the company’s short-term debt obligations, along with applicable interest rates as of December 31, 2015 and 2014:


	2015				2014
			Average				Average
(millions, except interest rates)	Carrying		Interest		Carrying		Interest
	Value		Rate		Value		Rate
Short-term debt
Commercial paper		$ 605.0	0.70	%		$ 887.8	0.46	%
Notes payable		30.9	3.33	%		62.1	9.65	%
Long-term debt, current maturities		1,569.4				754.9
Total		$ 2,205.3				$ 1,704.8

As of December 2015, the company had in place a $2.0 billion multi-year credit facility, which expires in December 2019. The credit facility has been established with a diverse syndicate of banks and supports the company’s $2.0 billion U.S. commercial paper program and the company’s $200 million European commercial paper program. Combined borrowing under these two commercial paper programs may not exceed $2.0 billion. The company’s U.S. commercial paper program, as shown in the previous table, had $605 million and $888 million outstanding as of December 31, 2015 and 2014, respectively. The company had no commercial paper outstanding under its European program at December 31, 2015 or 2014.

As of December 31, 2015, the company’s short-term borrowing program was rated A-2 by Standard & Poor’s and P-2 by Moody’s.

The following table provides the components of the company’s long-term debt obligations, along with applicable interest rates as of December 31, 2015 and 2014:


		2015								2014
				Average		Effective				Average		Effective
	Maturity	Carrying		Interest		Interest		Carrying		Interest		Interest
(millions, except interest rates)	by Year	Value		Rate		Rate		Value		Rate		Rate
Long-term debt
Description / 2015 Principal Amount
Seven year 2008 senior notes ($0 million)	2015		$ -	-	%	-	%		$ 250.0	4.88	%	5.03	%
Three year 2012 senior notes ($0 million)	2015		-	-	%	-	%		499.4	1.00	%	1.02	%
Term loan ($125 million)	2016		125.0	1.40	%	1.40	%		399.7	1.37	%	1.37	%
Series B private placement senior notes (€175 million)	2016		184.9	4.59	%	4.73	%		217.7	4.59	%	4.73	%
Five year 2011 senior notes ($1.25 billion)	2016		1,247.3	3.00	%	3.08	%		1,245.3	3.00	%	3.20	%
Five year 2012 senior notes ($500 million)	2017		497.9	1.45	%	0.82	%		495.0	1.45	%	1.10	%
Three year 2015 senior notes ($300 million)	2018		297.8	1.55	%	0.98	%		-	-	%	-	%
Series A private placement senior notes ($250 million)	2018		248.6	3.69	%	4.32	%		249.3	3.69	%	5.22	%
Five year 2015 senior notes ($300 million)	2020		298.1	2.25	%	2.30	%		-	-	%	-	%
Ten year 2011 senior notes ($1.25 billion)	2021		1,243.7	4.35	%	4.43	%		1,242.7	4.35	%	4.43	%
Series B private placement senior notes ($250 million)	2023		249.1	4.32	%	4.36	%		249.0	4.32	%	4.36	%
Ten year 2015 senior notes (€575 million)	2025		601.8	2.63	%	2.99	%		-	-	%	-	%
Thirty year 2011 senior notes ($750 million)	2041		738.3	5.50	%	5.56	%		737.8	5.50	%	5.56	%
Capital lease obligations			5.6						9.3
Other			91.5						3.1
Total debt			5,829.6						5,598.3
Long-term debt, current maturities			(1,569.4)						(754.9)
Total long-term debt			$ 4,260.2						$ 4,843.4

Term Loans

In November 2012, the company entered into a $900 million term loan credit agreement with various banks. In April 2013, in connection with the close of the Champion transaction, the company initiated term loan borrowings of $900 million. Under the agreement, the term loan bears interest at a floating base rate plus a credit rating based margin. The term loan can be repaid in part or in full at any time without penalty, but in any event must be repaid in full by April 2016. The company repaid $275 million, $400 million and $100 million of term loan borrowings during 2015, 2014 and 2013, respectively. In January 2016, subsequent to the company’s year end, it repaid the remaining $125 million term loan.

Public Notes

In January 2016, subsequent to the company’s year end, it issued $800 million of debt securities consisting of a $400 million aggregate principal three year fixed rate note with a coupon rate of 2.00% and a $400 million aggregate principal seven year fixed rate note with a coupon rate of 3.25%. The proceeds were used to repay a portion of the company’s outstanding commercial paper, repay the remaining term loan balance, and for general corporate purposes.

In July 2015, the company issued a €575 million aggregate principal ten year fixed rate note with a coupon rate of 2.625% ($602 million as of December 31, 2015). The proceeds were used to repay a portion of the company’s outstanding commercial paper.

In January 2015, the company issued $600 million of debt securities consisting of a $300 million aggregate principal three year fixed rate note with a coupon rate of 1.55% and a $300 million aggregate principal five year fixed rate note with a coupon rate of 2.25%. The proceeds were used to repay a portion of the company’s outstanding commercial paper and for general corporate purposes.

In December 2012, the company issued a $500 million aggregate principal five year fixed rate note with a coupon rate of 1.45%. The proceeds were used to finance a portion of the cash consideration paid in connection with the Champion acquisition.

In August 2012, the company issued a $500 million aggregate principal three year fixed rate note with a coupon rate of 1.00%. The proceeds were used to refinance outstanding commercial paper and for general corporate purposes. The debt was repaid at maturity in August 2015.

In December 2011, the company issued $3.75 billion aggregate principal of debt securities. The offering was a multi-tranche transaction consisting of three, five, ten and thirty year maturities. Interest rates range from 2.375% to 5.50%. The proceeds were used to repay outstanding commercial paper, which was issued to fund a portion of the cash component of the Nalco merger, repay the Nalco term loans and fund share repurchases. The $500 million 2.375% notes were repaid at maturity in December 2014.

In February 2008, the company issued a $250 million aggregate principal seven year fixed rate note with a coupon rate of 4.875%. The proceeds were used to refinance outstanding commercial paper and for general corporate purposes. The $250 million 4.875% notes were repaid at maturity in February 2015.

The series of notes issued by the company in January 2016, July 2015, January 2015, December 2012 and December 2011, pursuant to public debt offerings (the “Public Notes”) may be redeemed by the company at its option at redemption prices that include accrued and unpaid interest and a make-whole premium. Upon the occurrence of a change of control accompanied by a downgrade of the Public Notes below investment grade rating, within a specified time period, the company will be required to offer to repurchase the Public Notes at a price equal to 101% of the aggregate principal amount thereof, plus any accrued and unpaid interest to the date of repurchase.

The Public Notes are senior unsecured and unsubordinated obligations of the company and rank equally with all other senior and unsubordinated indebtedness of the company.

Private Notes

In October 2011, the company entered into a Note Purchase Agreement to issue and sell $500 million aggregate principal private placement senior notes, split into two series: a $250 million aggregate principal seven year fixed rate note with a coupon rate of 3.69% and a $250 million aggregate principal twelve year fixed rate note with a coupon rate of 4.32%. Both series of the notes were funded in November 2011. The proceeds were used for general corporate purposes, including partially funding the Nalco merger.

In July 2006, the company entered into a Note Purchase Agreement to issue a €175 million aggregate principal ($185 million as of December 31, 2015) ten year private placement fixed rate note with a coupon rate of 4.585%. The notes were funded in December 2006.

The series of notes issued by the company in December 2006 and November 2011 pursuant to private debt offerings (the “Private Notes”) may be redeemed by the company at its option at redemption prices that include accrued and unpaid interest and a make-whole premium. Upon the occurrence of specified changes of control involving the company, the company will be required to offer to repurchase the Private Notes at a price equal to 100% of the aggregate principal amount thereof, plus any accrued and unpaid interest to the date of repurchase. Additionally, the company will be required to make a similar offer to repurchase the Private Notes upon the occurrence of specified merger events or asset sales involving the company, when accompanied by a downgrade of the Private Notes below investment grade rating, within a specified time period.

The Private Notes are unsecured senior obligations of the company and rank equal in right of payment with all other senior indebtedness of the company. The Private Notes shall be unconditionally guaranteed by subsidiaries of the company in certain circumstances, as described in the note purchase agreements as amended.

Other Debt

During 2015, the company acquired the beneficial interest in the trust owning the leased Naperville facility resulting in debt assumption of $100.2 million and the addition of $135.2 million in property, plant and equipment. Certain administrative, divisional, and research and development personnel are based at the Naperville facility. Cash paid as a result of the transaction was $19.8 million. The assumed debt is reflected within the "Other" line of the table above. The assumption of debt and the majority of the property, plant and equipment addition represented non-cash financing and investing activities, respectively.

Covenants and Future Maturities

The company is in compliance with all covenants under the company’s outstanding indebtedness at December 31, 2015.

As of December 31, 2015, the aggregate annual maturities of long-term debt for the next five years were:


(millions)
2016			$ 1,569
2017			510
2018			558
2019			12
2020			310

Net Interest Expense

Interest expense and interest income incurred during 2015, 2014 and 2013 were as follows:


(millions)	2015		2014		2013
Interest expense		$ 253.7		$ 268.0		$ 272.8
Interest income		(10.1)		(11.4)		(10.5)
Interest expense, net		$ 243.6		$ 256.6		$ 262.3

Interest expense generally includes the expense associated with the interest on the company’s outstanding borrowings. Interest expense also includes the amortization of debt issuance costs and debt discounts, which are both recognized over the term of the related debt.