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Debt and Credit Facilities
9 Months Ended
Sep. 28, 2019
Debt Disclosure [Abstract]  
Debt and Credit Facilities Debt and Credit Facilities
 
September 28,
2019
 
December 31,
2018
Term Loan due 2021
$

 
$
399

3.5% senior notes due 2021

 
397

3.75% senior notes due 2022
550

 
748

3.5% senior notes due 2023
596

 
596

4.0% senior notes due 2024
592

 
591

1.75% senior convertible notes due 2024
987

 

6.5% debentures due 2025
72

 
118

7.5% debentures due 2025
254

 
346

4.6% senior notes due 2028
691

 
690

6.5% debentures due 2028
24

 
36

4.6% senior notes due 2029
804

 

6.625% senior notes due 2037
37

 
54

5.5% senior notes due 2044
396

 
396

5.22% debentures due 2097
91

 
91

Other long-term debt
638

 
862

 
5,732

 
5,324

Adjustments for unamortized gains on interest rate swap terminations
(3
)
 
(4
)
Less: current portion
(617
)
 
(31
)
Long-term debt
$
5,112

 
$
5,289


As of September 28, 2019, the Company had a $2.2 billion syndicated, unsecured revolving credit facility scheduled to mature in April 2022 (the "2017 Motorola Solutions Credit Agreement"). The 2017 Motorola Solutions Credit Agreement includes a $500 million letter of credit sub-limit with $450 million of fronting commitments. Borrowings under the facility bear interest at the prime rate plus the applicable margin, or at a spread above the London Interbank Offered Rate ("LIBOR"), at the Company's option. An annual facility fee is payable on the undrawn amount of the credit line. The interest rate and facility fee are subject to adjustment if the Company's credit rating changes. The Company must comply with certain customary covenants including a maximum leverage ratio, as defined in the 2017 Motorola Solutions Credit Agreement. The Company was in compliance with its financial covenants as of September 28, 2019. There were no borrowings outstanding or letters of credit issued under the revolving credit facility as of December 31, 2018 and September 28, 2019.
In conjunction with the Avigilon acquisition in the first quarter of 2018, the Company entered into a term loan for $400 million with a maturity date of March 26, 2021 (the “Term Loan”). Interest on the Term Loan is variable, indexed to LIBOR, and paid monthly. The weighted average borrowing rates for amounts outstanding during the three and nine months ended September 28, 2019 were 3.53% and 3.68%, respectively. No additional borrowings are permitted and amounts borrowed and repaid or prepaid may not be re-borrowed. During the three months ended September 28, 2019, the Company repaid all amounts borrowed under the Term Loan.
In May of 2019, the Company issued $650 million of 4.60% senior notes due 2029, receiving proceeds of $645 million after debt issuance costs and debt discounts. These proceeds were then used to repurchase $614 million in principal amount of its outstanding long-term debt for a purchase price of $654 million, excluding approximately $3 million of accrued interest. After accelerating the amortization of debt issuance costs and debt discounts, the Company recognized a loss of approximately $43 million related to this repurchase in Other within Other income (expense) in the Condensed Consolidated Statements of Operations.
In August of 2019, the Company issued a follow-on $150 million to the outstanding 4.60% senior notes due 2029, bringing the total outstanding principal to $800 million. The Company recognized net proceeds of $159 million after debt premiums and debt issuance costs. These proceeds were then used to repurchase the remaining $150 million principal amount outstanding of the 3.5% senior notes due 2021 for a purchase price of $155 million, excluding approximately $2 million of accrued interest. After accelerating the amortization of debt issuance costs and debt discounts, the Company recognized a loss of approximately $7 million related to this repurchase in Other, net within Other income (expense) in the Condensed Consolidated Statements of Operations.
On August 25, 2015, the Company entered into an agreement with Silver Lake Partners to issue $1.0 billion of 2.00% senior convertible notes ("Senior Convertible Notes") which were scheduled to mature in September 2020. The notes became fully convertible as of August 25, 2017. The notes were convertible based on a conversion rate adjusted for dividends declared which automatically adjusts the exercise price. During the third quarter of 2018, the Company settled $200 million in principal amount of the Senior Convertible Notes for aggregate consideration of $369 million in cash, inclusive of the conversion premium.
During the third quarter of 2019, the remaining notes were convertible based on a conversion rate of 14.9186, adjusted for dividends declared, per $1,000 principal amount (equal to a conversion price of $67.03 per share). On September 5, 2019, the Company entered into an agreement with Silver Lake Partners to settle the remaining $800 million in principal amount of the Senior Convertible Notes in two installments: (i) $200 million of principal notes were repurchased during the third quarter for an aggregate consideration of $526 million in cash, inclusive of the conversion premium and (ii) $600 million of principal paid in cash on October 7, 2019, subsequent to the quarter, with 5.5 million shares converted into common stock on September 5, 2019. As of September 28, 2019, the Company reflected the principal amount of $600 million paid subsequent to the quarter as short term debt and recognized a gain of $4 million from the extinguishment of the 2.00% senior convertible notes in Other, net within Other income (expense) in the Condensed Consolidated Statement of Operations.
On September 5, 2019, the Company entered into an agreement with Silver Lake Partners to issue $1.0 billion of 1.75% senior convertible notes which mature in September 2024 ("New Senior Convertible Notes"). Interest on these notes is payable semiannually. The notes are convertible anytime on or after two years from their issuance date, except in certain limited circumstances. The notes are convertible based on a conversion rate of 4.9140 per $1,000 principal amount (which is equal to an initial conversion price of $203.50 per share). In the event of conversion, the Company intends to settle the principal amount of the New Senior Convertible Notes in cash. The Company has recorded a debt liability associated with the New Senior Convertible Notes by determining the fair value of an equivalent debt instrument without a conversion option. Using a discount rate of 2.45%, which was determined based on a review of relevant market data, the Company has calculated the debt liability to be $986 million, indicating a $14 million discount to be amortized over the expected life of the debt instrument. The remaining proceeds of $14 million were allocated to the conversion option and accordingly, increased Additional paid-in capital.
During the third quarter of 2019, the Company established an unsecured commercial paper program, backed by the revolving credit facility, under which the Company may issue unsecured commercial paper notes up to a maximum aggregate principal amount of $2.2 billion outstanding at any one time. Proceeds from the issuances of the notes are expected to be used for general corporate purposes. The notes are issued at a zero-coupon rate and are issued at a discount which reflects the interest component.  At maturity, the notes are paid back in full including the interest component. The notes are not redeemable prior to maturity. As of September 28, 2019 the Company had no outstanding debt under the commercial paper program. Subsequent to the end of the quarter, the Company issued $265 million commercial paper under the program.