Debt and Credit Agreements

The Company has a multi-year revolving credit facility (the "Revolving Credit Facility") that is available for use throughout the world. The following table illustrates the amount outstanding under the Revolving Credit Facility and available credit at December 31, 2016.



	December 31, 2016
(In thousands)	Facility Limit		Outstanding Balance		Outstanding Letters of Credit		Available Credit
Revolving Credit Facility (a U.S.-based program)	$	400,000	$	98,000	$	43,549	$	258,451

On December 2, 2015, the Company entered into (i) an amendment and restatement agreement and (ii) a second amended and restated credit agreement (together, the “Financing Agreements”). The Financing Agreements increased the Company's overall borrowing capacity from $500 million to $600 million by (i) amending and restating the Company’s then existing credit agreement, (ii) establishing a term loan A facility in an initial aggregate principal amount of $250 million, by converting a portion of the outstanding balance under the then existing credit agreement on a dollar-for-dollar basis and (iii) reducing the Revolving Credit Facility limit to $350 million.

During September 2016, the Company received approximately $145 million in cash, net, from its sale of its remaining 26% equity interest in the Infrastructure strategic venture. The Company used these proceeds to repay $85.0 million on the term loan A facility and $60.0 million on the Revolving Credit Facility. Related to the repayment of the term loan A facility, the Company expensed $1.1 million of previously deferred financing costs.

In November 2016, the Company entered into a new senior secured credit facility (the “Senior Secured Credit Facility”), consisting of a $400 million Revolving Credit Facility and a $550 million term loan B facility (the "Term Loan Facility"). Upon closing of the Senior Secured Credit Facility, the Company amended and extended the existing Revolving Credit Facility, repaid the existing term loan A facility and redeemed, satisfied and discharged the Notes in accordance with the indenture governing the Notes. As a result, a charge of $35.3 million was recorded during the fourth quarter of 2016 consisting principally of the cost of early extinguishment of the Notes and the write-off of unamortized deferred financing costs associated with the Company’s existing Financing Agreements and the Notes, and is reflected in the financing activities section of the Consolidated Statements of Cash Flows as a reduction of long-term debt.

Borrowings under the Revolving Credit Facility bear interest at a rate per annum ranging from 87.5 to 200 basis points over the base rate or 187.5 to 300 basis points over the adjusted London Interbank Offered Rate ("LIBOR") as defined in the credit agreement governing the Senior Secured Credit Facility (the "Credit Agreement"). Any principal amount outstanding under the Revolving Credit Facility is due and payable on the maturity of the Revolving Credit Facility. The Revolving Credit Facility matures on November 2, 2021. Additionally, upon the completion of the potential sale or separation of the Harsco Metals & Minerals Segment, the Revolving Credit Facility would be reduced, if necessary, to reflect a consolidated net debt to consolidated adjusted EBITDA ratio of 2.5 to 1.0 on a pro-forma basis.

Borrowings under the Term Loan Facility bear interest at a rate per annum ranging from 375 to 400 basis points over the base rate or 475 to 500 basis points over the adjusted LIBOR rate, subject to a 1% floor, as defined in the Credit Agreement. The Term Loan Facility requires scheduled quarterly payments, each equal to 0.25% of the original principal amount of the loans under the Term Loan Facility made on the closing date. These payments are reduced by the application of any prepayments, and any remaining balance is due and payable on the maturity of the Term Loan Facility. The Term Loan Facility matures on November 2, 2023.

The Credit Agreement requires certain mandatory prepayments of the Term Loan Facility, subject to certain exceptions, based on net cash proceeds of certain sales or distributions of assets, as well as certain casualty and condemnation events, in some cases subject to reinvestment rights and certain other exceptions; net cash proceeds of any issuance of debt, excluded permitted debt issuances; and a percentage of excess cash flow, as defined by the Credit Agreement, during a fiscal year.

The Senior Secured Credit Facility imposes certain restrictions including, but not limited to, restrictions as to types and amounts of debt of liens that may be incurred by the Company; limitations on increases in dividend payments and limitations on certain acquisitions by the Company.

With respect to the Senior Secured Facility, the obligations of the Company are guaranteed by substantially all of the Company’s current and future wholly-owned domestic subsidiaries (“Guarantors”). All obligations under the Senior Credit Facility, and the guarantees of those obligations, are secured, subject to certain exceptions, by substantially all of the Company’s assets and the assets of the Guarantors.

In January 2017, the Company entered into a series of fixed-floating interest rate swaps that cover the period from 2018 through 2021, and had the effect of converting $300 million of the Term Loan Facility from floating-rate to fixed-rate. The fixed rates provided by the swaps replace the adjusted LIBOR rate in the interest calculation, range from 1.65% for 2018 to 2.71% for 2021.

At December 31, 2016, the Company had $648.0 million of borrowings under the Senior Secured Credit Facility consisting of $550.0 million under the Term Loan Facility and $98.0 million under the Revolving Credit Facility. At December 31, 2016, of these balances $642.5 million was classified as Long-term debt and $5.5 million was classified as Current maturities of long-term debt on the Consolidated Balance Sheets. At December 31, 2015, the Company had $415.0 million of borrowings under the Financing Agreements consisting of $250.0 million under the term loan A facility and $165.0 million under the Revolving Credit Facility. At December 31, 2015, of these balances $380.5 million was classified as Long-term debt, $22.0 million was classified as Short-term borrowings and $12.5 million was classified as Current maturities of long-term debt on the Consolidated Balance Sheets.

Short-term borrowings amounted to $4.3 million and $30.2 million at December 31, 2016 and 2015, respectively. At December 31, 2016, Short-term borrowings consist primarily of bank overdrafts. At December 31, 2015, Short-term borrowings consist primarily of $22.0 million of Revolving Credit Facility borrowings and bank overdrafts. The weighted-average interest rate for short-term borrowings at December 31, 2016 and 2015 was 6.2% and 4.3%, respectively.

Long-term debt consists of the following:



(In thousands)	December 31 2016			December 31 2015
5.75% notes due May 15, 2018	$	—		$	449,005
Senior Secured Credit Facilities:
Term Loan A Facility with an interest rate of 2.9% at December 31, 2015	—			250,000
Term Loan B Facility with an interest rate of 6.0% at December 31, 2016	550,000
Revolving Credit Facility with an average interest rate of 3.6% and 3.2% at December 31, 2016 and 2015, respectively	98,000			143,000
Other financing payable (including capital leases) in varying amounts due principally through 2017 with a weighted-average interest rate of 5.7% and 5.6% at December 31, 2016 and 2015, respectively	25,410			38,830
Total debt obligations	673,410			880,835
Less: deferred financing costs	(18,597		)	(10,130		)
Total debt obligations, net of deferred financing costs	654,813			870,705
Less: current maturities of long-term debt	(25,574		)	(25,084		)
Long-term debt	$	629,239		$	845,621

The maturities of long-term debt for the four years following December 31, 2017 are as follows:



(In thousands)
2018	$	9,924
2019	6,217
2020	5,664
2021	103,531

Cash payments for interest on debt were $49.6 million, $44.4 million and $44.2 million in 2016, 2015 and 2014, respectively.

The Credit Agreement contains a consolidated net debt to consolidated adjusted earnings before interest, tax, depreciation and amortization ("EBITDA") ratio covenant, which is not to exceed 4.0 to 1.0, and a minimum consolidated adjusted EBITDA to consolidated interest charges ratio covenant, which is not to be less than 3.0 to 1.0. The consolidated net debt to consolidated adjusted EBITDA ratio covenant is reduced to 3.75 to 1.0 after December 31, 2016 and to 3.5 to 1.0 after December 31, 2017. At December 31, 2016, the Company was in compliance with these and all other covenants.