Long-Term Debt and Revolving Promissory Note

3 Months Ended

Mar. 31, 2016

Long-Term Debt and Revolving Promissory Note

Long-term debt, including unamortized discounts and premiums, unamortized debt issuance costs and note payable - affiliate, were as follows:



	Interest Rates	Maturities	As of March 31, 2016			As of December 31, 2015
			(Dollars in millions)
Senior notes	6.125% - 8.375%	2016 - 2056	$	7,464		7,229
Term loan	2.190%	2025	100			100
Capital lease and other obligations	Various	Various	17			17
Unamortized premiums, net			11			16
Unamortized debt issuance costs			(131		)	(123	)
Total long-term debt			7,461			7,239
Less current maturities			(243		)	(242	)
Long-term debt, excluding current maturities			$	7,218		6,997
Note payable - affiliate	6.758%	2022	$	855		855

New Issuance

In January 2016, QC issued $235 million aggregate principal amount of 7% Notes due 2056, in exchange for net proceeds, after deducting underwriting discounts and other expenses, of approximately $227 million. All of the 7% Notes are unsecured obligations and may be redeemed by QC, in whole or in part, on or after February 1, 2021, at a redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest to the redemption date.

Revolving Promissory Note

We are currently indebted to an affiliate of our ultimate parent company, CenturyLink, under a revolving promissory note that provides us with a funding commitment of up to $1.0 billion aggregate principal amount through June 30, 2022, of which $855 million was outstanding as of March 31, 2016. As of March 31, 2016, the weighted average interest rate was 6.758%. As of March 31, 2016 and December 31, 2015, this revolving promissory note is reflected on our consolidated balance sheets as a current liability under note payable - affiliate. As of March 31, 2016, $19 million of accrued interest is reflected in other current liabilities on our consolidated balance sheet. In accordance with the note agreement, all accrued interest and unpaid interest is capitalized to the unpaid principal balance on June 1 and December 1 of each year.

Covenants

The indentures governing our notes contain certain covenants including, but not limited to: (i) a prohibition on certain liens on our assets; and (ii) a limitation on mergers or sales of all, or substantially all, of our assets, which limitation requires that a successor assume the obligation with regard to these notes. These indentures do not contain any cross-default provisions.

Our senior notes were issued under indentures dated April 15, 1990 and October 15, 1999. These indentures do not contain any financial covenants, but do include restrictions that limit our ability to (i) incur, issue or create liens upon our property and (ii) consolidate with or merge into, transfer or lease all or substantially all of our assets to any other party.

As of March 31, 2016, we believe we were in compliance with the provisions and covenants of our debt agreements.

Subsequent Events

On May 2, 2016, QC paid at maturity the $235 million principal amount and accrued and unpaid interest due under its 8.375% Notes.