Notes Payable, Long Term Debt and Other Obligations

9 Months Ended

Sep. 30, 2011

Notes Payable Long Term Debt and Other Obligations [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 consist of:

	September 30, 2011			December 31, 2010
Vector:
11% Senior Secured Notes due 2015, net of unamortized discount of $630 and $730	$	414,370		$	414,270
6.75% Variable Interest Senior Convertible Note due 2014, net of unamortized discount of $36,542 and $38,353*	13,458			11,647
6.75% Variable Interest Senior Convertible Exchange Notes 2014, net of unamortized discount of $59,282 and $64,713*	48,248			42,817
3.875% Variable Interest Senior Convertible Debentures due 2026, net of unamortized discount of $82,849 and $83,060*	16,151			26,940
Liggett:
Revolving credit facility	—			35,710
Term loan under credit facility	5,822			6,222
Equipment loans	18,939			19,030
Other	605			761
Total notes payable, long-term debt and other obligations	517,593			557,397
Less:
Current maturities	(26,864		)	(51,345		)
Amount due after one year	$	490,729		$	506,052

______________________

* The fair value of the derivatives embedded within the 6.75% Variable Interest Convertible Note ($17,636 at September 30, 2011 and $20,219 at December 31, 2010, respectively), the 6.75% Variable Interest Senior Convertible Exchange Notes ($33,424 at September 30, 2011 and $38,324 at December 31, 2010, respectively), and the 3.875% Variable Interest Senior Convertible Debentures ($77,176 at September 30, 2011 and $82,949 at December 31, 2010, respectively) is separately classified as a derivative liability in the condensed consolidated balance sheets.

Revolving Credit Facility - Liggett:

Liggett has a $50,000 credit facility with Wachovia Bank, N.A. (“Wachovia”), none of which was outstanding at September 30, 2011. Availability as determined under the facility was approximately $36,000 based on eligible collateral at September 30, 2011.

11% Senior Secured Notes due 2015 - Vector:

The Company has outstanding $415,000 principal amount of its 11% Senior Secured Notes due 2015 (the “Senior Secured Notes”). The Senior Secured Notes were sold in August 2007 ($165,000), September 2009 ($85,000), April 2010 ($75,000) and December 2010 ($90,000) in private offerings to qualified institutional investors in accordance with Rule 144A of the Securities Act of 1933.

In May 2011, the Company completed an exchange offer to exchange the Senior Secured Notes issued in December 2010 for an equal amount of newly issued 11% Senior Secured Notes due 2015. The new Secured Notes have substantially the same terms as the original notes, except that the new Secured Notes have been registered under the Securities Act.

3.875% Variable Interest Senior Convertible Notes due 2026 - Vector:

The Company was required to mandatorily redeem 10% of the total aggregate principal amount outstanding, or $11,000, of the Company's 3.875% Variable Interest Senior Convertible Debentures due 2026 on June 15, 2011.  Other than the holders of $7 principal amount of the Notes, who had 10% of their aggregate principal amount of Notes mandatorily redeemed, each  holder of the notes chose to convert its pro-rata portion of the $11,000 of principal into the Company's common stock.  The Company recorded a loss of $0 and $1,217 for the three and nine months ended September 30, 2011, on the conversion of the $11,000 of notes into 685,005 shares of common stock. The debt conversion resulted in a non-cash financing transaction of $10,993. The holders have the option to put all of the remaining senior convertible notes on June 15, 2012.  Accordingly, the Company reclassified the remaining Notes and related fair value of derivatives embedded within convertible debt to current liabilities.

Non-cash Interest Expense - Vector:

Components of non-cash interest expense are as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2011		2010		2011		2010
Amortization of debt discount	$	2,709	$	2,033	$	7,551	$	5,481
Amortization of deferred finance costs	1,123		1,276		4,004		3,418
Loss on 3.875% Variable Interest Senior Convertible Debentures mandatorily redeemed	—		—		1,217		—
	$	3,832	$	3,309	$	12,772	$	8,899

Fair Value of Notes Payable and Long-term Debt:

	September 30, 2011				December 31, 2010
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Notes payable and long-term debt	$	517,593	$	754,185	$	557,397	$	827,247