Financing Arrangements and Debt

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Financing Arrangements and Debt

Note G – Financing Arrangements and Debt

Long-term debt consisted of the following as of December 31, 2022 and 2021:

	December 31,
(Thousands of dollars)	2022		2021
Notes payable
6.875% notes, due August 2024	$	—	$	242,428
5.75% notes, due August 2025	248,675		548,675
5.875% notes, due December 2027	543,249		543,249
6.375% notes, due July 2028	451,934		550,000
7.05% notes, due May 2029	250,000		250,000
6.125% notes, due December 2042 ¹	339,761		349,000
Total notes payable	1,833,619		2,483,352
Unamortized debt issuance cost and discount on notes payable	(15,324)		(22,773)
Total notes payable, net of unamortized discount	1,818,295		2,460,579
Capitalized lease obligation, due through March 2029 ¹	4,844		5,489
Total debt including current maturities	1,823,139		2,466,068
Current maturities	(687)		(654)
Total long-term debt	$	1,822,452	$	2,465,414

1 Coupon rate may fluctuate 25 basis points if rating is periodically downgraded or upgraded by S&P and Moody’s.

The amount of long-term debt repayable over each of the next five years and thereafter are as follows:  nil in 2023, nil in 2024, $248.7 million in 2025, nil in 2026, $543.2 million in 2027 and $1.04 billion thereafter.

The Company also has a shelf registration statement on file with the U.S. Securities and Exchange Commission that permits the offer and sale of debt and/or equity securities through October 15, 2024.

In November 2022, the Company entered into a $800 million revolving credit facility (RCF) and the previous revolving credit facility has been terminated effective November 2022. The RCF is a senior unsecured guaranteed facility which expires on November 17, 2027, unless the outstanding principal amount of the Company’s 5.75%, 2025 (2025 Notes) as at February 15, 2025 exceeds $50.0 million, in which case, the RCF will expire on that date. On the date the Company achieves certain credit ratings (Investment Grade Ratings Date), certain covenants will be modified as set forth in the RCF. In addition, prior to Investment Grade Ratings Date, the Company will be required to comply with a maximum consolidated leverage ratio of 3.50x, and a minimum consolidated interest coverage ratio of 2.50x. From and after the Investment Grade Ratings Date, the Company will be required to comply with a maximum ratio of consolidated total debt to consolidated total capitalization of 60%. Borrowings under the RCF bear interest at rates based on either the “Alternate Base Rate”, the “Adjusted Term Secured Overnight Financing Rate (SOFR) Rate”, or the “Adjusted Daily Simple SOFR Rate”, respectively, plus the “Applicable Rate”. The “Alternate Base Rate” of interest is the highest of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on such day plus ½ of 1% and (c) the Adjusted Term SOFR Rate for a one month Interest Period as published two U.S. Government Securities Business Days prior to such day (or if such day is not a U.S. Government Securities Business Day, the immediately preceding U.S. Government Securities Business Day) plus 1%. The “Adjusted Term SOFR Rate” of interest is equal to (a) the Term SOFR Rate for such Interest Period, plus (b) 0.10%. The “Adjusted Daily Simple SOFR Rate” of interest is equal to (a) the Daily Simple SOFR, plus (b) 0.10%. The “Applicable Rate” of interest means, for any day, the applicable rate per annum based upon the ratings of Moody’s and S&P, respectively. The Company incurred $14.4 million in transaction costs and recorded the amount to “Deferred charges and other assets” in the Consolidated Balance Sheets, which is being amortized to interest expense over the term of the RCF. At December 31, 2022, the Company had no outstanding borrowings under the RCF and $57.6 million of outstanding letters of credit, which reduces the borrowing capacity of the RCF. At December 31, 2022, the interest rate in effect on borrowings under the facility would have been 6.96%. At December 31, 2022, the Company was in compliance with all covenants related to the RCF.

In November 2022, the Company redeemed $200.0 million aggregate principal amount of its 5.750% senior notes due 2025 (2025 Notes). The cost of debt extinguishment of $3.9 is included in “Interest expense, net” on the Consolidated Statement of Operations for the year ended December 31, 2022. The cash costs of $2.9 million are shown as a financing activity on the Consolidated Statement of Cash Flows for the year ended December 31, 2022.

In September and October 2022, the Company paid a total of $7.2 million to complete the open market repurchases of $9.2 million aggregate principal amount of its 6.125% senior notes due 2042 (2042 Notes). There were no additional cash costs related to the September and October 2022 debt extinguishment on the 2042 Notes for the year ended December 31, 2022.

In August 2022, the Company redeemed the remaining $42.4 million of its 6.875% senior notes due in 2024 (2024 Notes) and tendered $100.0 million and $98.1 million aggregate principal amount of its 2025 Notes and 6.375% senior notes due 2028 (2028 Notes), respectively. The total cost of the debt extinguishment of $4.0 million is included in “Interest expense, net” on the Consolidated Statement of Operations for the year ended December 31, 2022. The debt extinguishment on the 2025 and 2028 Notes had cash costs of $2.0 million and is shown as a financing activity on the Consolidated Statement of Cash Flows for the year ended December 31, 2022.

In June 2022, the Company redeemed $200.0 million aggregate principal amount of its 6.875% 2024 Notes. The cost of the debt extinguishment of $4.3 million is included in “Interest expense, net” on the Consolidated Statement of Operations for the year ended December 31, 2022. The cash costs of $3.4 million are shown as a financing activity on the Consolidated Statement of Cash Flows for the year ended December 31, 2022.

In March 2021, the Company issued $550.0 million of new notes that bear interest at a rate of 6.375% and mature on July 15, 2028. The Company incurred transaction costs of $8.1 million on the issuance of these new notes and the Company will pay interest semi-annually on January 15 and July 15 of each year. The proceeds of the $550.0 million notes, along with cash on hand, were used to redeem and cancel $259.3 million of the Company’s 4.00% notes due June 2022 and $317.1 million of the Company’s 4.95% notes due December 2022 (originally issued as 3.70% notes due 2022; collectively the 2022 Notes). The cost of the debt extinguishment of $36.9 million is included in “Interest expense, net” on the Consolidated Statement of Operations for the year

ended December 31, 2021. The cash costs of $34.2 million are shown as a financing activity on the Consolidated Statement of Cash Flows for the year ended December 31, 2021.

In August 2021, the Company redeemed $150.0 million aggregate principal amount of its 2024 Notes. The cost of the debt extinguishment of $3.5 million is included in Interest expense, net” on the Consolidated Statement of Operations for the year ended December 31, 2021. The cash costs of $2.6 million are shown as a financing activity on the Consolidated Statement of Cash Flows for the year ended December 31, 2021.

In December 2021, the Company redeemed an additional $150.0 million aggregate principal amount of the 2024 Notes. The cost of the debt extinguishment of $3.4 million is included in “Interest expense, net” on the Consolidated Statement of Operations for the year ended December 31, 2021. The cash costs of $2.6 million are shown as a financing activity on the Consolidated Statement of Cash Flows for the year ended December 31, 2021.