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LONG-TERM DEBT

The components of long-term debt as of December 31 are as follows:


	December 31, 2016				December 31, 2015
			Unamortized				Unamortized
			Debt				Debt
			Issuance				Issuance
	Principal		Debt Cost		Principal		Debt Cost
	(Thousands of dollars)
Senior Notes issued March 17, 2014, interest only payable semi-annually at 5.25%, maturing March 15, 2019	$	500,000	$	2,753	$	500,000	$	3,999

Revolving Credit Facility due October 1, 2018 with a group of commercial banks, interest payable at variable rates		134,000		—		57,500		—

Total long-term debt	$	634,000	$	2,753	$	557,500	$	3,999

Listed below is information on our future annual maturities of long-term debt (in thousands):


2017	$	—
2018		134,000
2019		500,000
2020		—
2021		—
Thereafter		—

Total	$	634,000

Senior Notes – The 5.25% Senior Notes (“Notes”) are unconditionally guaranteed on a senior basis by our domestic subsidiaries and are general, unsecured obligations of ours and the subsidiary guarantors. We have the option to redeem some or all of the Notes at specified redemption prices. The Notes contain restrictive covenants, including limitations on incurring indebtedness, creating liens, selling assets, and entering into certain transactions with affiliates. The covenants limit our ability to pay cash dividends on common stock, repurchase or redeem common or preferred equity, prepay subordinated debt, and make certain investments. There are no restrictions on dividends from a subsidiary to the parent company, nor any restrictions on investments in a subsidiary by the parent company. Upon the occurrence of a “Change in Control Repurchase Event” (as defined in the indenture governing the notes), each holder of the Notes will have the right to require us to purchase that holder’s Notes for a cash price equal to 101% of their principal amount. Upon the occurrence of an “Event of Default” (as defined in the indenture), the trustee or the holders of the Notes may declare all of the outstanding Notes to be due and payable immediately. The Company is not aware of any instances of non-compliancewith the covenants governing the Notes.

Proceeds from our sale of the Notes in 2014 were approximately $493.8 million, net of fees and expenses, and were used to retire all of our $300.0 million of previously outstanding 8.625% Senior Notes pursuant to a tender offer, at a total cost of $329.4 million, including the tender premium and accrued interest. As a result of our repurchase of 8.625% Senior Notes in 2014, we recorded a pretax charge of $29.8 million, which consisted of $26.7 million of premium and $3.1 million of unamortized issuance costs.

The Notes bear interest at a fixed rate and therefore changes in market interest rates do not affect our interest payment obligations on the notes. The fair market value of the Notes varies as changes occur to general market interest rates, the remaining maturity of the notes, and our credit worthiness. At December 31, 2016, the fair market value of Notes was $474.4 million and the carrying value was $500.0 million. At December 31, 2015, the fair market value of the Notes was $403.1 million, and the carrying value was $500.0 million.

Revolving Credit Facility – On September 30, 2016, we amended our revolving credit facility to, among other things, (a) extend the maturity date to October 1, 2018, and (b) modify the fixed charge coverage ratio such that it shall only be tested when the total of our Short Term Investments are less than $150.0 million at the end of any fiscal quarter. Under this facility, we can borrow up to $150.0 million at floating interest rates based on either the London Interbank Offered Rate plus 225 basis points or the prime rate (each as defined in our amended and restated revolving credit facility), at our option. Our revolving credit facility includes usual and customary covenants and events of default for credit facilities of its type. Our ability to borrow under the credit facility is conditioned upon our continued compliance with such covenants, including, among others, (i) covenants that restrict our ability to engage in certain asset sales, mergers or other fundamental changes, to incur liens or to engage in certain other transactions or activities and (ii) financial covenants that stipulate that PHI will maintain a consolidated working capital ratio of at least 2 to 1, a funded debt to consolidated net worth ratio not greater than 1.5 to 1, a fixed charge coverage ratio of at least 1.1 to 1 if our short term investments fall below $150.0 million, and consolidated net worth of at least $450.0 million (with all such terms or amounts as defined in or determined under the amended and restated revolving credit facility). As of December 31, 2016, we believe we were in compliance with these covenants.

Cash paid to fund interest expense was $29.2 million for the year ended December 31, 2016 and $27.7 million for the year ended December 31, 2015.

For additional information on our revolving credit facility, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Long Term Debt” included in Item 7 of this report.

Other - We maintain a separate letter of credit facility that had $13.0 million in letters of credit outstanding at December 31, 2016, compared to $15.3 million in letters of credit outstanding at December 31, 2015. The letters of credit securing our workers compensation policies, in the amount of $3.8 million, are evergreen. The letter of credit securing an Air Medical traditional provider contract, in the amount of $9.2 million, expires on October 29, 2017.

We also have outstanding a letter of credit for $7.6 million issued under our $150.0 million credit facility that reduces the amount we can borrow under that facility. This letter of credit was issued to guaranty our performance under a contract that was awarded in late 2016.