Notes Payable, Long-Term Debt and Other Obligations

6 Months Ended

Jun. 30, 2019

Notes Payable, Long-Term Debt and Other Obligations

NOTES PAYABLE, LONG-TERM DEBT AND OTHER OBLIGATIONS

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



	June 30, 2019			December 31, 2018
Vector:
6.125% Senior Secured Notes due 2025	$	850,000		$	850,000
10.5% Senior Notes due 2026	325,000			325,000
7.5% Variable Interest Senior Convertible Notes due 2019, net of unamortized discount of $0 and $3,359*	—			226,641
5.5% Variable Interest Senior Convertible Debentures due 2020, net of unamortized discount of $18,852 and $29,465*	213,148			202,535
Liggett:
Revolving credit facility	31,026			28,381
Term loan under credit facility	2,262			2,409
Equipment loans	545			1,039
Other	30,264			30,440
Notes payable, long-term debt and other obligations	1,452,245			1,666,445
Less:
Debt issuance costs	(21,435		)	(23,614		)
Total notes payable, long-term debt and other obligations	1,430,810			1,642,831
Less:
Current maturities	(250,659		)	(256,134		)
Amount due after one year	$	1,180,151		$	1,386,697

______________________

* The fair value of the derivatives embedded within the 7.5% Variable Interest Senior Convertible Notes ($0 at June 30, 2019 and $6,635 at December 31, 2018, respectively) and the 5.5% Variable Interest Senior Convertible Debentures ($17,287 at June 30, 2019 and $24,789 at December 31, 2018, respectively), is separately classified as a derivative liability in the condensed consolidated balance sheets.

6.125% Senior Secured Notes due 2025 — Vector:

As of June 30, 2019, the Company was in compliance with all debt covenants related to its 6.125% Senior Secured Notes due 2025.

10.5% Senior Notes due 2026 — Vector:

As of June 30, 2019, the Company was in compliance with all debt covenants related to its 10.5% Senior Notes due 2026.

7.5% Variable Interest Senior Convertible Notes due 2019 — Vector:

In January 2019, the Company paid $230,000 of principal and $8,102 of accrued interest as full payment of its 7.5% Variable Interest Senior Convertible Notes that matured on January 15, 2019.

5.5% Variable Interest Senior Convertible Debentures due 2020 — Vector:

As of June 30, 2019, the Company was in compliance with all debt covenants related to its 5.5% Variable Interest Senior Convertible Debentures due 2020.

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

As of June 30, 2019, a total of $33,288 was outstanding under the revolving and term loan portions of the credit facility. The total outstanding balance under the revolving and term loan portions of the credit facility was classified as current debt as of June 30, 2019. Availability, as determined under the facility, was approximately $21,800 based on eligible collateral at June 30, 2019. As of June 30, 2019, the Company’s applicable subsidiaries were in compliance with all debt covenants under this revolving and term loan facility.

Non-Cash Interest Expense — Vector:



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Amortization of debt discount, net	$	5,447	$	20,386	$	13,972	$	38,579
Amortization of debt issuance costs	1,053		2,914		2,238		5,625
	$	6,500	$	23,300	$	16,210	$	44,204

Fair Value of Notes Payable and Long-Term Debt:



	June 30, 2019					December 31, 2018
	Carrying			Fair		Carrying			Fair
	Value			Value		Value			Value
Senior Notes	$	1,175,000		$	1,094,888	$	1,175,000		$	1,034,500
Variable Interest Senior Convertible Debt	213,148			239,090		429,176			468,704
Liggett and other	64,097			64,105		62,269			62,255
Notes payable and long-term debt	$	1,452,245	(1)	$	1,398,083	$	1,666,445	(1)	$	1,565,459

______________________

⁽¹⁾The carrying value does not include the carrying value of the embedded derivative. See Note 12.

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 12 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 June 30, 2019 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.