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Notes Payable, Long Term Debt and Other Obligations
3 Months Ended
Mar. 31, 2012
Notes Payable Long Term Debt and Other Obligations [Abstract]  
NOTES PAYABLE, LONG-TERM DEBT AND OTHER OBLIGATIONS
NOTES PAYABLE, LONG-TERM DEBT AND OTHER OBLIGATIONS

Notes payable, long-term debt and other obligations consist of:

 
March 31,
2012
 
December 31,
2011
Vector:
 
 
 
11% Senior Secured Notes due 2015, net of unamortized discount of $549 and $591*
$
414,451

 
$
414,409

6.75% Variable Interest Senior Convertible Note due 2014, net of unamortized discount of $34,722 and $35,704*
15,278

 
14,296

6.75% Variable Interest Senior Convertible Exchange Notes 2014, net of unamortized discount of $54,559 and $57,036*
52,971

 
50,494

3.875% Variable Interest Senior Convertible Debentures due 2026, net of unamortized discount of $83,011 and $82,948*
15,987

 
16,052

Liggett:
 
 
 
Revolving credit facility
2

 
21,472

Term loan under credit facility
4,400

 
5,689

Equipment loans
20,998

 
21,255

Other
473

 
533

Total notes payable, long-term debt and other obligations
524,560

 
544,200

Less:
 
 
 
Current maturities
(24,484
)
 
(50,844
)
Amount due after one year
$
500,076

 
$
493,356

______________________
* The fair value of the derivatives embedded within the 6.75% Variable Interest Convertible Note ($16,704 at March 31, 2012 and $16,929 at December 31, 2011, respectively), the 6.75% Variable Interest Senior Convertible Exchange Notes ($31,660 at March 31, 2012 and $32,086 at December 31, 2011, respectively), and the 3.875% Variable Interest Senior Convertible Debentures ($106,191 at March 31, 2012 and $84,485 at December 31, 2011, respectively) is separately classified as a derivative liability in the condensed consolidated balance sheets.

Credit Facility - Liggett:

In February 2012, Liggett and Wells Fargo Bank, National Association ("Wells Fargo") renewed the $50,000 credit facility through February 2015. The Credit Facility is collateralized by all inventories and receivables of Liggett and a mortgage on its manufacturing facility. The Credit Facility expires on March 8, 2015, subject to automatic renewal for additional one-year periods unless a notice of termination is given by Liggett at least 30 days prior to such date or the anniversary of such date.

Prime rate loans under the Credit Facility bear interest at a rate equal to the prime rate of Wells Fargo and Eurodollar rate loans bear interest at a rate equal to 2.0% more than Wells Fargo's adjusted Eurodollar rate. The Credit Facility contains covenants that provide that Liggett's earnings before interest, taxes, depreciation and amortization, as defined under the Credit Facility, on a trailing twelve month basis, shall not be less than $100,000 if Liggett's Excess Availability, as defined under the Credit Facility, is less than $20,000. The covenants also require that annual Capital Expenditures, as defined under the Credit Facility (before a maximum carryover amount of $2,500), shall not exceed $15,000 during any fiscal year.

Term Loan under Credit Facility
On February 21, 2012, Wells Fargo, as successor-in-interest to Wachovia Bank, National Association, amended and restated the existing $5,600 term loan (the “Term Loan”) made to 100 Maple LLC (“Maple”), a subsidiary of Liggett, within the commitment under the Credit Facility. In connection with the amendment and restatement the maturity date of the Term Loan was extended to March 1, 2015 and the outstanding principal amount was paid down to $4,425. The Term Loan bears an interest rate equal to 1.75% more than Wells Fargo's adjusted Eurodollar rate. Monthly payments of $25 are due under the Term Loan from March 1, 2012 to February 1, 2015 ($885 in total) with the balance of $3,540 due at maturity on March 1, 2015.

The Term Loan is collateralized by the existing collateral securing the Credit Facility, including, without limitation, certain real property owned by Maple. The Term Loan did not increase the $50,000 borrowing amount of the Credit Facility, but did increase the outstanding amounts under the Credit Facility by the amount of the term loan and proportionately reduces the maximum borrowing availability under the Credit Facility.

As of March 31, 2012, a total of $4,402 was outstanding under the revolving and term loan portions of the credit facility. Availability as determined under the facility was approximately $45,598 based on eligible collateral at March 31, 2012.


3.875% Variable Interest Senior Convertible Notes due 2026 - Vector:

The holders of the Company's 3.875% Variable Interest Senior Convertible Debentures due 2026 have the option to put all of the $98,998 senior convertible debentures on June 15, 2012.  Accordingly, the remaining Debentures and related fair value of derivatives embedded within convertible debt are recorded as current liabilities.

Non-cash Interest Expense - Vector:

Components of non-cash interest expense are as follows:

 
Three Months Ended
 
March 31,
 
2012
 
2011
Amortization of debt discount
$
3,437

 
$
2,282

Amortization of deferred finance costs
710

 
1,417

Gain on 3.875% Variable Interest Senior Convertible Debentures converted
(2
)
 

 
$
4,145

 
$
3,699



Fair Value of Notes Payable and Long-term Debt:

 
March 31, 2012
 
December 31, 2011
 
Carrying
 
Fair
 
Carrying
 
Fair
 
Value
 
Value
 
Value
 
Value
Notes payable and long-term debt
$
524,560

 
$
779,908

 
$
544,200

 
$
801,353



Notes payable and long-term debt are carried on the condensed balance sheet at amortized cost. The fair value determination disclosed above would be classified as Level 2 under the fair value hierarchy disclosed in Note 8 if such liabilities were recorded on the condensed balance sheet at fair value.