DEBT

Rayonier’s debt consisted of the following at June 30, 2016:



	June 30, 2016
Senior Notes due 2022 at a fixed interest rate of 3.75%		$325,000
Term Credit Agreement borrowings due 2024 at a variable interest rate of 2.1% at June 30, 2016	350,000
Incremental Term Loan Agreement borrowings due 2026 at a variable interest rate of 2.4% at June 30, 2016	300,000
Mortgage notes due 2017 at fixed interest rates of 4.35%	42,436
Solid waste bond due 2020 at a variable interest rate of 1.7% at June 30, 2016	15,000
New Zealand JV noncontrolling interest shareholder loan at 0% interest rate	23,747
Total debt	1,056,183
Less: Current maturities of long-term debt	—
Less: Deferred financing costs	(3,876		)
Long-term debt, net of deferred financing costs		$1,052,307

Principal payments due during the next five years and thereafter are as follows:



2016	—
2017 (a)	42,000
2018	—
2019	—
2020	15,000
Thereafter	998,747
Total Debt		$1,055,747


(a)	The mortgage notes due in 2017 were recorded at a premium of $0.4 million as of June 30, 2016. Upon maturity the liability will be $42 million.

Incremental Term Loan Agreement

On April 28, 2016, the Company entered into an incremental term loan agreement with CoBank, ACB, as administrative agent, and a syndicate of Farm Credit institutions to provide a 10-year, $300 million incremental term loan. Proceeds from the new term loan were used to fund Rayonier’s portion of the Menasha acquisition net of the proceeds received from the Washington disposition, to repay approximately $105 million outstanding on the Company’s revolving credit facility and for general corporate purposes. The Company has entered into an interest rate swap transaction to fix the cost of $200 million of the term loan for its 10-year term, while the remaining $100 million has a variable rate as of June 30, 2016 (see Note 1 — Basis of Presentation for subsequent event). The periodic interest rate on the incremental term loan agreement is LIBOR plus 1.900%. The Company receives annual patronage payments, which are profit distributions made by a cooperative to its member-users based on the quantity or value of business done with the member-user. The Company estimates the effective interest rate for the second quarter was approximately 2.6% after consideration of the estimated patronage payments and interest rate swaps.

Term Credit Agreement

On August 5, 2015, the Company entered into a credit agreement with CoBank, ACB, as administrative agent, and a syndicate of Farm Credit institutions and other commercial banks to provide $550 million of new credit facilities, including a five-year $200 million unsecured revolving credit facility (see below) and a nine-year $350 million term loan facility. The Company has entered into an interest rate swap transaction to fix the cost of the term loan facility over its nine-year term. The periodic interest rate on the term credit agreement is LIBOR plus 1.625%. The Company estimates the effective interest rate for the second quarter was approximately 3.3% after consideration of the estimated patronage payments and interest rate swaps. As of June 30, 2016, the term debt was advanced in full under the term credit agreement.

Revolving Credit Facility

In August 2015, the Company entered into a five-year $200 million unsecured revolving credit facility, replacing the previous $200 million revolving credit facility and $100 million farm credit facility, which were scheduled to expire in April 2016 and December 2019, respectively. The periodic interest rate on the revolving credit facility is LIBOR plus 1.250%, with an unused commitment fee of 0.175%.

Net repayments of $105.0 million were made in the second quarter of 2016 on the revolving credit facility. At June 30, 2016, the Company had available borrowings of $194.5 million under the revolving credit facility, net of $5.5 million to secure its outstanding letters of credit.

Joint Venture Debt

On March 3, 2016, the Company used proceeds from the term loan facility to fund a capital contribution into the New Zealand JV. The New Zealand JV in turn used the proceeds for full repayment of the outstanding amount of $155 million under its Tranche A credit facility.

In June 2016, the New Zealand JV entered into a 12-month $14.2 million working capital facility and an 18-month $14.2 million working capital facility, replacing the previous $28.4 million facility that expired in June 2016.

During the six months ended June 30, 2016, the New Zealand JV made additional borrowings and repayments of $135.8 million on the facility. Draws totaling $28.4 million remain available on the working capital facilities at June 30, 2016. In addition, the New Zealand JV paid $0.3 million of its shareholder loan held with the non-controlling interest party. Changes in exchange rates for the six months ended June 30, 2016 increased debt on a U.S. dollar basis for its shareholder loan by $0.8 million.

Debt Covenants

In connection with the Company’s $350 million term credit agreement, $300 million incremental term loan agreement and $200 million revolving credit facility, customary covenants must be met, the most significant of which include interest coverage and leverage ratios. In addition to these financial covenants, the mortgage notes, senior notes, term credit agreement, incremental term loan agreement and revolving credit facility include customary covenants that limit the incurrence of debt and the disposition of assets, among others. At June 30, 2016, the Company was in compliance with all applicable covenants.

Subsequent Event

See Note 1 — Basis of Presentation for additional information on subsequent events.