Notes Payable, Long-Term Debt and Other Obligations (Tables)

12 Months Ended

Dec. 31, 2016

Notes payable, long-term debt and other obligations

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



	December 31, 2016			December 31, 2015
Vector:
7.75% Senior Secured Notes due 2021, including premium of $13,954 and $8,014	$	848,954		$	608,014
5.5% Variable Interest Senior Convertible Debentures due 2020, net of unamortized discount of $71,247 and $86,136*	187,503			172,614
7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $108,480 and $132,119*	121,520			97,881
Liggett:
Revolving credit facility	37,163			3,213
Term loan under credit facility	2,999			3,269
Equipment loans	4,519			9,716
Other	591			461
Total notes payable, long-term debt and other obligations	1,203,249			895,168
Less:
Debt issuance costs	(30,798		)	(30,141		)
Total notes payable, long-term debt and other obligations	1,172,451			865,027
Less:
Current maturities	(39,508		)	(8,919		)
Amount due after one year	$	1,132,943		$	856,108

_____________________________

The fair value of the derivatives embedded within the 5.5% Variable Interest Senior Convertible Debentures ($59,433 at December 31, 2016 and $71,959 at December 31, 2015, respectively) and the 7.5% Variable Interest Senior Convertible Debentures ($52,899 at December 31, 2016 and $72,083 at December 31, 2015, respectively) is separately classified as a derivative liability in the consolidated balance sheets.

Schedule of non-cash interest expense

A summary of non-cash interest expense associated with the amortization of the debt discount created by the embedded derivative liability associated with the Company’s variable interest senior convertible debt is as follows:



	Year Ended December 31,
	2016		2015		2014
6.75% note	$	—	$	—	$	6,097
6.75% exchange notes	—		—		13,570
7.5% convertible notes	14,294		8,777		5,553
5.5% convertible notes	11,438		9,752		6,851
Interest expense associated with embedded derivatives	$	25,732	$	18,529	$	32,071

A summary of non-cash changes in fair value of derivatives embedded within convertible debt is as follows:



	Year Ended December 31,
	2016		2015			2014
6.75% note	$	—	$	(5	)	$	3,212
6.75% exchange notes	—		—			8,990
7.5% convertible notes	19,184		15,555			5,296
5.5% convertible notes	12,526		8,905			1,911
Gain on changes in fair value of derivatives embedded within convertible debt	$	31,710	$	24,455		$	19,409

Schedule of convertible debt

The following table reconciles unamortized debt discount within convertible debt:



	6.75% Note			6.75% Exchange Notes			7.5% Convertible Notes			5.5% Convertible Notes			Total
Balance at January 1, 2014	$	19,312		$	25,945		$	155,818		$	—		$	201,075
Conversion of $107,530 of 6.75% Variable Interest Senior Convertible Exchange Notes due November 15, 2014	—			(3,989		)	—			—			(3,989		)
Conversion of $25,000 of 6.75% Variable Interest Senior Convertible Note due February 15, 2015	(7,898		)	—			—			—			(7,898		)
Issuance of convertible notes - embedded derivative	—			—			—			82,775			82,775
Issuance of convertible notes - beneficial conversion feature	—			—			—			24,974			24,974
Amortization of embedded derivatives	(6,097		)	(13,570		)	(5,553		)	(6,851		)	(32,071		)
Amortization of beneficial conversion feature	(5,317		)	(8,386		)	(3,631		)	(2,067		)	(19,401		)
Balance at December 31, 2014	—			—			146,634			98,831			245,465
Amortization of embedded derivatives	—			—			(8,777		)	(9,752		)	(18,529		)
Amortization of beneficial conversion feature	—			—			(5,738		)	(2,943		)	(8,681		)
Balance at December 31, 2015	—			—			132,119			86,136			218,255
Amortization of embedded derivatives	—			—			(14,294		)	(11,438		)	(25,732		)
Amortization of beneficial conversion feature	—			—			(9,345		)	(3,451		)	(12,796		)
Balance at December 31, 2016	$	—		$	—		$	108,480		$	71,247		$	179,727

The following table reconciles the fair value of derivatives embedded within convertible debt:



	6.75% Note			6.75% Exchange Notes			7.5% Convertible Notes			5.5% Convertible Notes			Total
Balance at January 1, 2014	$	6,607		$	12,521		$	92,934		$	—		$	112,062
Issuance of 5.5% Note	—			—			—			82,775			82,775
Conversion of $25,000 of 6.75% Variable Interest Senior Convertible Note due February 15, 2015	(2,511		)	—			—			—			(2,511		)
Conversion of $107,530 of 6.75% Variable Interest Senior Convertible Exchange Notes due November 15, 2014	—			(3,531		)	—			—			(3,531		)
Gain from changes in fair value of embedded derivatives	(3,212		)	(8,990		)	(5,296		)	(1,911		)	(19,409		)
Balance at December 31, 2014	884			—			87,638			80,864			169,386
Conversion of $25,000 of 6.75% Variable Interest Senior Convertible Note due February 15, 2015	(889		)	—			—			—			(889		)
Loss (gain) from changes in fair value of embedded derivatives	5			—			(15,555		)	(8,905		)	(24,455		)
Balance at December 31, 2015	—			—			72,083			71,959			144,042
Gain from changes in fair value of embedded derivatives	—			—			(19,184		)	(12,526		)	(31,710		)
Balance at December 31, 2016	$	—		$	—		$	52,899		$	59,433		$	112,332

A summary of non-cash interest expense associated with the amortization of the debt discount created by the beneficial conversion feature on the Company’s variable interest senior convertible debt is as follows:



	Year Ended December 31,
	2016		2015		2014
Amortization of beneficial conversion feature:
6.75% note	$	—	$	—	$	5,317
6.75% exchange notes	—		—		8,386
7.5% convertible notes	9,345		5,738		3,631
5.5% convertible notes	3,451		2,943		2,067
Interest expense associated with beneficial conversion feature	$	12,796	$	8,681	$	19,401

Schedule of fair value of notes payable and long-term debt

The estimated fair value of the Company’s notes payable and long-term debt are as follows:



	December 31, 2016					December 31, 2015
	Carrying Value			Fair Value		Carrying Value			Fair Value
Notes payable and long-term debt	$	1,203,249	⁽¹⁾	$	1,570,732	$	895,168	⁽¹⁾	$	1,297,875

__________

⁽¹⁾The carrying value does not include the carrying value of the embedded derivative. See Note 18.

Schedule of scheduled maturities

Scheduled maturities of long-term debt are as follows:



	Principal		Unamortized Discount/ (Premium)			Net
Year Ending December 31:
2017	$	39,509	$	—		$	39,509
2018	2,099		—			2,099
2019	231,261		108,479			122,782
2020	261,151		71,247			189,904
2021	835,001		(13,954		)	848,955
Thereafter	—		—			—
Total	$	1,369,021	$	165,772		$	1,203,249