
	LONG-TERM DEBT

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



	December 31, 2017				December 31, 2016
	Principal		Unamortized Debt Issuance Debt Cost		Principal		Unamortized Debt Issuance 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	$	1,506	$	500,000	$	2,753
Revolving Credit Facility due March 7, 2019 with a group of commercial banks, interest payable at variable rates	117,500		—		134,000		—
Total long-term debt	$	617,500	$	1,506	$	634,000	$	2,753

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



2018	$	—
2019	617,500
2020	—
2021	—
2022	—
Thereafter	—
Total	$	617,500

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. As of December 31, 2017, we were in compliance with the covenants governing the Notes.

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, 2017, the fair market value of Notes was $499.2 million and the carrying value was $500.0 million. At December 31, 2016, the fair market value of the Notes was $474.4 million, and the carrying value was $500.0 million.

Revolving Credit Facility – We have an amended and restated revolving credit facility (our "credit facility") that matures on March 7, 2019. Under our credit facility, we can borrow up to $130.0 million at floating interest rates based on either the London Interbank Offered Rate plus 275 basis points (as defined in our credit facility). 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 net funded debt to consolidated net worth ratio not greater than 1.5 to 1, a fixed charge coverage ratio of at least 1 to 1 if our short term investments fall below $150.0 million, and consolidated net worth of at least $500.0 million (with all such terms or amounts as defined in or determined under the amended and restated revolving credit facility). As of December 31, 2017, we were in compliance with these covenants.

During the fourth quarter of 2017, we amended our credit facility to (i) extend the maturity date of the line of credit from October 1, 2018 to March 7, 2019, (ii) decrease the secured revolving line of credit from $150.0 million to $130.0 million, (iii) limit extensions of credit under the revolving line of credit to a borrowing base calculated periodically based on specified percentages of the value of eligible accounts and eligible inventory and the value of certain short-term investments, and (iv) waive the fixed charge coverage ratio for the fourth quarter of 2017 and the first quarter of 2018. The amendment also amends certain specified interest rates and various covenants including amendments that change the fixed charge coverage ratio from 1.10 to 1.00 to 1.00 to 1.00, calculated on a quarterly basis, change the Company’s required consolidated net worth from $450.0 million to $500.0 million, and permit debt in an aggregate principal amount not to exceed $5.0 million to accommodate an international working capital line of credit.

Cash paid to fund interest expense was $30.5 million for the year ended December 31, 2017, $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.

Impact of Covenants. Our debt covenants could materially adversely affect our ability to operate or expand our business, to pursue strategic transactions, or to otherwise pursue our plans and strategies.

Our debt instruments contain cross payment default or cross acceleration provisions. When present, these provisions could have a wider impact on liquidity than might otherwise arise from a default or acceleration of a single debt instrument.

Our ability to comply with the financial covenants in our credit facility could be adversely impacted by a wide variety of events, including unforeseen contingencies, many of which are beyond our control.

Other - We maintain a separate letter of credit facility that had $12.4 million in letters of credit outstanding at December 31, 2017, compared to $13.0 million in letters of credit outstanding at December 31, 2016. The letters of credit securing our workers compensation policies, in the amount of $3.2 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, 2018.

We also have outstanding a letter of credit for $7.6 million issued under our $130.0 million credit facility that reduces the amount we can borrow under that facility. This letter of credit was issued to guarantee our performance under a contract that was awarded in late 2017.