Long-Term Debt and Note Payable - Affiliate

6 Months Ended

Jun. 30, 2020

Long-Term Debt and Note Payable - Affiliate

The following chart reflects (i) the consolidated long-term debt of Qwest Corporation and its subsidiaries, including finance lease and other obligations, unamortized premiums, net, unamortized debt issuance costs and (ii) note payable - affiliate:


	Interest Rates⁽¹⁾	Maturities	June 30, 2020		December 31, 2019
			(Dollars in millions)
Senior notes	6.125% - 7.750%	2021 - 2057	$	4,656	5,956
Term loan ⁽²⁾	LIBOR + 2.00%	2025	100		100
Finance lease and other obligations	Various	Various	7		10
Unamortized premiums, net			4		—
Unamortized debt issuance costs			(107)		(115)
Total long-term debt			4,660		5,951
Less current maturities			(302)		(1,105)
Long-term debt, excluding current maturities			$	4,358	4,846
Note payable - affiliate	5.561%	2022	$	1,100	1,069

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⁽¹⁾As of June 30, 2020.

⁽²⁾Qwest Corporation's Term Loan had an interest rate of 2.180% as of June 30, 2020 and 3.800% as of December 31, 2019.

Long-Term Debt Maturities

Set forth below is the aggregate principal amount of our long-term debt as of June 30, 2020 (excluding unamortized premiums and discounts and unamortized debt issuance costs and excluding note payable-affiliate) maturing during the following years:


	(Dollars in millions)
2020 (remaining six months)	$	301
2021	951
2022	1
2023	1
2024	1
2025 and thereafter	3,508
Total long-term debt	$	4,763

Redemption of Senior Notes

On January 15, 2020, Qwest Corporation fully redeemed all $850 million aggregate principal amount of its outstanding 6.875% senior notes due 2033 and all $250 million aggregate principal amount of its outstanding 7.125% senior notes due 2043. On June 29, 2020, Qwest Corporation partially redeemed $200 million aggregate principal amount of its outstanding 6.875% Notes due 2054 (the "6.875% Notes"). These transactions resulted in a loss of $19 million.

On June 30, 2020, Quest Corporation issued notices to redeem the remaining $300 million in outstanding principal amount of its 6.875% Notes, effective August 7, 2020, see "Subsequent Event" below.

Note Payable - Affiliate

On September 30, 2017, Qwest Corporation entered into an amended and restated revolving promissory note in the amount of $965 million with an affiliate of our ultimate parent company, CenturyLink, Inc (the "Intercompany Note"). This Intercompany Note amended and replaced the original $1.0 billion revolving promissory note Qwest Corporation entered into on April 18, 2012 with the same affiliate. The outstanding principal balance owed by Qwest Corporation under the Intercompany Note and the accrued interest thereon is due and payable on demand, but if no demand is made, then on June 30, 2022. Interest is accrued on the outstanding principal balance during the respective interest period using a weighted average per annum interest rate on the consolidated outstanding debt of CenturyLink and its subsidiaries. As of June 30, 2020, the Intercompany Note had an outstanding balance of $1.1 billion and bore interest at a weighted-average interest rate of 5.561%. As of June 30, 2020 and December 31, 2019, the Intercompany Note is reflected on our consolidated balance sheets as a current liability under "Note payable - affiliate". In accordance with the terms of the Intercompany Note, interest shall be assessed on June 30th and December 31st (an "Interest Period"). Any assessed interest for an Interest Period that remains unpaid on the last day of the subsequent Interest Period is to be capitalized on such date and is to begin accruing interest. Through June 30, 2020, $135 million of such interest has been capitalized since entering into the Intercompany Note. As of June 30, 2020, $31 million of accrued interest is reflected in other current liabilities on our consolidated balance sheet.

Compliance

As of June 30, 2020, we believe we were in compliance with the financial covenants contained in our material debt agreements in all material respects.

Other

For additional information on our long-term debt and credit facilities, see Note 5—Long-Term Debt and Revolving Promissory Note to our consolidated financial statements in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2019.

Subsequent Event

On August 7, 2020, Qwest Corporation completed the redemption of the remaining $300 million aggregate principal amount of its outstanding 6.875% Notes.