Notes Payable, Long Term Debt and Other Obligations

3 Months Ended

Mar. 31, 2018

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, 2018			December 31, 2017
Vector:
6.125% Senior Secured Notes due 2025	$	850,000		$	850,000
7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $55,900 and $69,253*	174,100			160,747
5.5% Variable Interest Senior Convertible Debentures due 2020, net of unamortized discount of $48,847 and $53,687*	209,903			205,063
Liggett:
Revolving credit facility	25,130			31,614
Term loan under credit facility	2,630			2,704
Equipment loans	2,248			2,662
Other	683			752
Notes payable, long-term debt and other obligations	1,264,694			1,253,542
Less:
Debt issuance costs	(22,797		)	(25,478		)
Total notes payable, long-term debt and other obligations	1,241,897			1,228,064
Less:
Current maturities	(196,464		)	(33,820		)
Amount due after one year	$	1,045,433		$	1,194,244

______________________

* The fair value of the derivatives embedded within the 7.5% Variable Interest Senior Convertible Notes ($25,061 at March 31, 2018 and $31,164 at December 31, 2017, respectively) and the 5.5% Variable Interest Senior Convertible Debentures ($40,785 at March 31, 2018 and $45,249 at December 31, 2017, respectively), is separately classified as a derivative liability in the condensed consolidated balance sheets.

6.125% Senior Secured Notes due 2025 — Vector:

As of March 31, 2018, the Company was in compliance with all debt covenants related to its 6.125% Senior Secured Notes due 2025.

Revolving Credit Facility and Term Loan Under Credit Facility - Liggett:

As of March 31, 2018, a total of $27,760 was outstanding under the revolving and term loan portions of the credit facility. Availability, as determined under the facility, was approximately $26,600 based on eligible collateral at March 31, 2018.

Non-Cash Interest Expense and Loss on Extinguishment of Debt - Vector:



	Three Months Ended
	March 31,
	2018		2017
Amortization of debt discount, net	$	18,193	$	11,836
Amortization of debt issuance costs	2,681		1,970
Loss on extinguishment of 7.75% Senior Secured Notes	—		1,754		(1)
	$	20,874	$	15,560

______________________

⁽¹⁾The non-cash loss on extinguishment of the 7.75% Senior Secured Notes is a component of the $34,110 loss on the extinguishment of debt.

Fair Value of Notes Payable and Long-Term Debt:



	March 31, 2018					December 31, 2017
	Carrying			Fair		Carrying			Fair
	Value			Value		Value			Value
Notes payable and long-term debt	$	1,264,694	(1)	$	1,493,445	$	1,253,542	(1)	$	1,579,616

______________________

⁽¹⁾The carrying value does not include the carrying value of the embedded derivative. See Note 11.

Notes payable and long-term debt are carried on the condensed consolidated balance sheet at amortized cost. The fair value determinations disclosed above are classified as Level 2 under the fair value hierarchy disclosed in Note 11 if such liabilities were recorded on the condensed consolidated balance sheet at fair value. The estimated fair value of the Company’s notes payable and long-term debt has been determined by the Company using available market information and appropriate valuation methodologies including the evaluation of the Company’s credit risk as described in the Company’s Form 10-K. The Company used a derived price based upon quoted market prices and trade activity as of March 31, 2018 to determine the fair value of its publicly-traded notes and debentures. The carrying value of the revolving credit facility and term loan is equal to the fair value. The fair value of the equipment loans and other obligations was determined by calculating the present value of the required future cash flows. However, considerable judgment is required to develop the estimates of fair value and, accordingly, the estimate presented herein is not necessarily indicative of the amount that could be realized in a current market exchange.