XML 37 R21.htm IDEA: XBRL DOCUMENT v3.24.0.1
Notes Payable, Long-Term Debt and Other Obligations
 12 Months Ended
Dec. 31, 2023
Debt Disclosure [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 consisted of:
December 31, 2023December 31, 2022
Vector: 
5.75% Senior Secured Notes due 2029
$875,000 $875,000 
10.5% Senior Notes due 2026, net of unamortized discount of $1,719 and $2,209
516,973 539,926 
Liggett:
Revolving credit facility
— 22,035 
Equipment loans
8 37 
Total notes payable, long-term debt and other obligations1,391,981 1,436,998 
Less:
Debt issuance costs(20,162)(24,672)
Total notes payable, long-term debt and other obligations1,371,819 1,412,326 
Less:  
    Current maturities(8)(22,065)
Amount due after one year$1,371,811 $1,390,261 
Vector:
6.125% Senior Secured Notes due 2025:
On February 1, 2021, the 6.125% Senior Secured Notes due 2025, which had an aggregate principal amount of $850,000, were redeemed in full and the Company recorded a loss on the extinguishment of debt of $21,362 in 2021, including $13,013 of premium and $8,349 of other costs and non-cash interest expense related to the recognition of previously unamortized deferred finance costs.
5.75% Senior Secured Notes due 2029:
On January 28, 2021, the Company completed the sale of $875,000 in aggregate principal amount of its 5.75% Senior Secured Notes due 2029 (“5.75% Senior Secured Notes”) to qualified institutional buyers and non-U.S. persons in a private offering pursuant to the exemptions from the registration requirements of the Securities Act 1933 (“Securities Act”) contained in Rule 144A and Regulation S under the Securities Act. The aggregate net cash proceeds from the sale of the 5.75% Senior Secured Notes were approximately $855,500 after deducting the initial purchaser’s discount and estimated expenses and fees payable by the Company in connection with the offering. The Company used the net cash proceeds from the 5.75% Senior Secured Notes offering, together with cash on hand, to redeem all the Company’s outstanding 6.125% Senior Secured Notes due 2025, including accrued interest and any premium thereon, and to pay fees and expenses in connection with the offering of the 5.75% Senior Secured Notes.
The 5.75% Senior Secured Notes pay interest on a semi-annual basis at a rate of 5.75% per year and mature on the earlier of February 1, 2029 and the date that is 91 days before November 1, 2026, the final stated maturity date of the 10.5% Senior Notes due 2026 (“10.5% Senior Notes”) if such 10.5% Senior Notes have not been repurchased and cancelled or refinanced by such date.
The 5.75% Senior Secured Notes are fully and unconditionally guaranteed, subject to certain customary automatic release provisions, on a joint and several basis by all the wholly owned domestic subsidiaries of the Company that are engaged in the conduct of the Company’s cigarette businesses, which subsidiaries, as of the issuance date of the 5.75% Senior Secured Notes were also guarantors under the Company’s outstanding 10.5% Senior Notes. The guarantees provided by certain of the guarantors are secured by first priority or second priority security interests in certain collateral of such guarantors, including, in the case of VGR Holding LLC, a pledge of the membership interests of Liggett and Vector Tobacco, pursuant to security and pledge agreements, subject to certain permitted liens and exceptions as further described in the indenture and the security documents relating thereto. Neither New Valley LLC nor any of the Company’s subsidiaries engaged in the real estate business guarantee the 5.75% Senior Secured Notes. The Company does not pledge any collateral for the 5.75% Senior Secured Notes.
As of December 31, 2023, the Company was in compliance with all debt covenants.
10.5% Senior Notes due 2026:
On November 2, 2018, the Company completed the sale of $325,000 in aggregate principal amount of its 10.5% Senior Notes to qualified institutional buyers and non-U.S. persons in a private offering pursuant to the exemptions from the registration requirements of the Securities Act contained in Rule 144A and Regulation S under the Securities Act. The aggregate net proceeds from the initial sale of the 10.5% Senior Notes were approximately $315,000 after deducting underwriting discounts, commissions, fees and offering expenses.
On November 18, 2019, the Company completed the sale of an additional $230,000 in aggregate principal amount of its 10.5% Senior Notes. The Company received net proceeds of approximately $220,400 after deducting underwriting discounts, commissions, fees and offering expenses. The Company used a portion of the net cash proceeds from the offering to retire the Company’s outstanding 5.5% Variable Interest Senior Convertible Notes in April 2020.
For the years ended December 31, 2023 and 2022, the Company repurchased in the market $23,443 and $12,865, respectively, in aggregate principal amount of its 10.5% Senior Notes outstanding and recorded a loss of $549 and a gain of $412, respectively. The Senior Notes that were repurchased have been retired.
The Company pays cash interest on the 10.5% Senior Notes at a rate of 10.5% per year, payable semi-annually on May 1 and November 1 of each year. The 10.5% Senior Notes mature on November 1, 2026.
The 10.5% Senior Notes were fully and unconditionally guaranteed subject to certain customary automatic release provisions on a joint and several basis by all the Company’s wholly owned domestic subsidiaries that are engaged in the conduct of its cigarette businesses, and, prior to the Distribution, by DER Holdings LLC, through which the Company indirectly owned a 100% interest in Douglas Elliman as of December 31, 2023. In connection with the Distribution, the guarantee by DER Holdings LLC was released. DER Holdings LLC did not guarantee our 5.75% Senior Secured Notes.
As of December 31, 2023, the Company was in compliance with all debt covenants.
Revolving Credit Agreement — Liggett:
Liggett, 100 Maple LLC (“Maple”), a subsidiary of Liggett, and Vector Tobacco are party to the Credit Agreement with Wells Fargo, as agent and lender, which provides a maximum credit line of $90,000 and matures on March 22, 2026.
Loans under the Credit Agreement bear interest at a rate equal to, at the borrower’s option, (a) the base rate, (b) Term SOFR for the applicable interest period plus 2.25% or (c) Daily Simple SOFR plus 2.25%, where “SOFR” means the Secured Overnight Financing Rate. The interest rate as of December 31, 2023 was 7.56%. An unused line fee is also payable on the average undrawn commitments at a rate of 0.25%, regardless of the amount borrowed under the facility.
Borrowings are limited by a borrowing base equal to the sum of (a) the lesser of (i) 85% of eligible trade receivables less certain reserves and (ii) $15,000; plus (b) 80% of the value of eligible inventory consisting of packaged cigarettes; plus (c) the designated percentage of the value of eligible inventory consisting of leaf tobacco (i.e., 65% of Liggett’s eligible cost of inventory consisting of leaf tobacco less certain reserves or 85% of the net orderly liquidation value of eligible inventory); plus (d) the lesser of (i) the real property subline amount or (ii) 60% of the fair market value of eligible real property.
The obligations under the Credit Agreement are collateralized on a first priority basis by all inventories, receivables and certain other personal property of Liggett, Maple, and Vector Tobacco, and a mortgage on Liggett’s manufacturing facility and certain real property of Maple, subject to certain permitted liens.
Wells Fargo, Liggett, Maple, Vector Tobacco and the collateral agent for the holders of the 5.75% Senior Secured Notes have entered into an intercreditor agreement, pursuant to which the liens of such collateral agent on the assets that are subject to the Credit Agreement are subordinated to the liens of Wells Fargo on such assets.
The Credit Agreement contains customary affirmative and negative covenants, including covenants that limit the incurrence of indebtedness and liens, the acquisition of investments, the making of dividends and certain mergers, consolidations and asset sales. The Credit Agreement also contains financial covenants, including (a) a requirement that the Tobacco segment’s earnings before interest, taxes, depreciation and amortization, as defined under the Credit Agreement, on a trailing twelve month basis, shall not be less than $150,000 if the Tobacco segment’s excess availability, as defined under the Credit Agreement, is less than $30,000, and (b) a requirement that annual capital expenditures, as defined under the Credit Agreement (before a maximum carryover amount of $10,000), shall not exceed $20,000 during any fiscal year. The Credit Agreement also contains customary events of default. The borrowers were in compliance with these covenants as of December 31, 2023.
As of December 31, 2023, there was no outstanding balance due under the Credit Agreement. Availability, as determined under the Credit Agreement, was $84,000 based on eligible collateral as of December 31, 2023.
Non-Cash Interest Expense — Vector:
 Year Ended December 31,
 202320222021
   
Amortization of debt discount, net$490 $439 $393 
Amortization of debt issuance costs4,371 4,102 3,775 
Loss (gain) on repurchase of 10.5% Senior Notes
549 (412)— 
Loss on extinguishment of 6.125% Senior Secured Notes
— — 8,349 
$5,410 $4,129 $12,517 
Fair Value of Notes Payable and Long-Term Debt:
The estimated fair value of the Company’s notes payable and long-term debt was as follows:
 December 31, 2023December 31, 2022
Carrying
Value		Fair
Value		Carrying
Value		Fair
Value
 5.75% Senior Secured Notes due 2029
$875,000 $800,126 $875,000 $758,993 
10.5% Senior Notes due 2026
516,973 522,194 539,926 537,202 
Liggett and other8 8 22,072 22,072 
Notes payable and long-term debt$1,391,981 $1,322,328 $1,436,998 $1,318,267 
Notes payable and long-term debt are recorded on the consolidated balance sheets at amortized cost. The fair value determinations disclosed above would be classified as Level 2 under the fair value hierarchy disclosed in Note 18 if such liabilities were recorded on the 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 Note 1. The Company used a derived price based upon quoted market prices and trade activity as of December 31, 2023 to determine the fair value of its publicly traded notes and debentures. The carrying value of the revolving credit facility is equal to the fair value. The fair value of the equipment loans 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.
Scheduled Maturities:
Scheduled maturities of notes payable and long-term debt were as follows:
PrincipalUnamortized
Discount/ (Premium)		Net
Year Ending December 31:  
2024$8 $— $8 
2025— — — 
2026518,692 1,719 516,973 
2027— — — 
2028— — — 
Thereafter875,000 — 875,000 
Total$1,393,700 $1,719 $1,391,981