Notes Payable, Long-Term Debt and Other Obligations

9 Months Ended

Sep. 30, 2020

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:


	September 30, 2020		December 31, 2019
Vector:



6.125% Senior Secured Notes due 2025	$	850,000	$	850,000
10.5% Senior Notes due 2026, net of unamortized discount of $3,132 and $3,392	551,868		551,608

5.5% Variable Interest Senior Convertible Debentures due 2020, net of unamortized discount of $0 and $5,276*	—		164,334
Liggett:
Revolving credit facility	—		34,952

Equipment loans	94		347
Other	26,773		30,146
Notes payable, long-term debt and other obligations	1,428,735		1,631,387
Less:
Debt issuance costs	(22,087)		(24,902)
Total notes payable, long-term debt and other obligations	1,406,648		1,606,485
Less:
Current maturities	(10,684)		(209,269)
Amount due after one year	$	1,395,964	$	1,397,216

______________________

* The fair value of the derivatives embedded within the 5.5% Variable Interest Senior Convertible Debentures ($4,999 at December 31, 2019) is separately classified as a derivative liability in the condensed consolidated balance sheets.

6.125% Senior Secured Notes due 2025 — Vector:

As of September 30, 2020, 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 September 30, 2020, the Company was in compliance with all debt covenants related to its 10.5% Senior Notes due 2026.

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

In April 2020, the Company paid $169,610 of principal as full payment of its 5.5% Variable Interest Senior Convertible Debentures due 2020, which matured on April 15, 2020.

Revolving Credit Agreement — Liggett:

As of September 30, 2020, there was no outstanding balance due under the Third Amended and Restated Credit Agreement (the “Credit Agreement”), all of which was classified as current debt as of September 30, 2020. Availability, as determined under the Credit Agreement, was approximately $58,800 based on eligible collateral at September 30, 2020. As of September 30, 2020, the Company’s applicable subsidiaries were in compliance with all debt covenants under the Credit Agreement.

Other:

Other Notes Payable consist primarily of $26,300 of notes payable issued by New Valley. On December 31, 2018, New Valley acquired the remaining 29.41% interest in Douglas Elliman for a total purchase price of $40,000, which included $10,000 of cash paid and the remaining $30,000 of notes payable to the sellers. Interest on the outstanding principal balance of the notes accrued at the mid-term applicable federal rate (“AFR”) in effect as of December 31, 2018 until January 1, 2020 and thereafter is adjusted to the then-current AFR on each payment date. Principal and interest is payable in installments

through October 1, 2022. $3,750 of principal has been repaid through September 30, 2020 and the remaining principal is due to be repaid as follows: (1) $1,250 in the remainder of 2020; (2) $12,500 in 2021; and (3) $12,500 in 2022.

Non-Cash Interest Expense — Vector:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Amortization of debt discount, net	$	89	$	5,746	$	5,536	$	19,718
Amortization of debt issuance costs	847		1,089		2,894		3,327



	$	936	$	6,835	$	8,430	$	23,045

Fair Value of Notes Payable and Long-Term Debt:


	September 30, 2020				December 31, 2019
	Carrying		Fair		Carrying			Fair
	Value		Value		Value			Value
Senior Notes	$	1,401,868	$	1,419,309	$	1,401,608		$	1,409,920
Variable Interest Senior Convertible Debt	—		—		164,334			176,289
Liggett and other	26,867		26,878		65,445			65,456
Notes payable and long-term debt	$	1,428,735	$	1,446,187	$	1,631,387	(1)	$	1,651,665

______________________

(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 sheets 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 sheets 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 September 30, 2020 to determine the fair value of its publicly-traded notes and debentures. The carrying value of the revolving credit facility is equal to 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.