NOTE 13. DEBT

Long-Term Debt



	December 31,
	2018			2017
Notes payable:	($ in millions)
Variable-rate Senior Term Loan Facility, due 2022 (4.02% and 3.57% at December 31, 2018 and 2017, respectively)	$	543.0		$	1,323.4
Variable-rate Recovery Zone bonds, due 2024-2035 (3.67% and 3.27% at December 31, 2018 and 2017, respectively)	103.0			103.0
Variable-rate Go Zone bonds, due 2024 (3.67% and 3.27% at December 31, 2018 and 2017, respectively)	50.0			50.0
Variable-rate Industrial development and environmental improvement obligations, due 2025 (2.52% and 1.27% at December 31, 2018 and 2017, respectively)	2.9			2.9
9.75%, due 2023	720.0			720.0
10.00%, due 2025	500.0			500.0
5.50%, due 2022	200.0			200.0
5.125%, due 2027	500.0			500.0
5.00%, due 2030	550.0			—
Senior Revolving Credit Facility	—			20.0
Receivables Financing Agreement	125.0			249.7
Capital lease obligations	4.2			3.7
Total notes payable	3,298.1			3,672.7
Deferred debt issuance costs	(34.1		)	(32.6		)
Interest rate swaps	(33.7		)	(28.1		)
Total debt	3,230.3			3,612.0
Amounts due within one year	125.9			0.7
Total long-term debt	$	3,104.4		$	3,611.3

On January 19, 2018, Olin issued $550.0 million aggregate principal amount of 5.00% senior notes due February 1, 2030 (2030 Notes), which were registered under the Securities Act of 1933, as amended. Interest on the 2030 Notes began accruing from January 19, 2018 and is paid semi-annually beginning on August 1, 2018. Proceeds from the 2030 Notes were used to redeem $550.0 million of debt under the $1,375.0 million term loan facility (Term Loan Facility). For the year ended December 31, 2018, we recognized interest expense of $2.6 million for the write-off of unamortized deferred debt issuance costs related to the redemption of $550.0 million of debt under the Term Loan Facility.

On March 9, 2017, we entered into a new five-year $1,975.0 million senior credit facility, which amended and restated the existing $1,850.0 million senior credit facility. We recognized interest expense of $1.2 million for the write-off of unamortized deferred debt issuance costs related to this action during 2017. Pursuant to the agreement, the aggregate principal amount under the term loan facility was increased to $1,375.0 million, and the aggregate commitments under the senior revolving credit facility were increased to $600.0 million (Senior Revolving Credit Facility and, together with the Term Loan Facility, the Senior Credit Facility), from $500.0 million. At December 31, 2018, we had $596.5 million available under our $600.0 million Senior Revolving Credit Facility because we had issued $3.5 million of letters of credit. In March 2017, we drew the entire $1,375.0 million term loan and used the proceeds to redeem the remaining balance of the existing $1,350.0 million senior credit facility of $1,282.5 million and a portion of the $800.0 million Sumitomo Credit Facility (Sumitomo Credit Facility). The maturity date for the Senior Credit Facility was extended from October 5, 2020 to March 9, 2022. The $600.0 million Senior Revolving Credit Facility includes a $100.0 million letter of credit subfacility. The Term Loan Facility included amortization payable in equal quarterly installments at a rate of 5.0% per annum for the first two years, increasing to 7.5% per annum for the following year and to 10.0% per annum for the last two years. However, in connection with the $550.0 million prepayment of the Term Loan Facility in January 2018, the required quarterly installments of the Term Loan Facility were eliminated. For the years ended December 31, 2017 and 2016, we repaid $51.6 million and $67.5 million, respectively, under the required quarterly installments of the term loan facilities.

Under the Senior Credit Facility, we may select various floating rate borrowing options. The actual interest rate paid on borrowings under the Senior Credit Facility is based on a pricing grid which is dependent upon the leverage ratio as calculated under the terms of the applicable facility for the prior fiscal quarter. The facility includes various customary restrictive covenants, including restrictions related to the ratio of debt to earnings before interest expense, taxes, depreciation and amortization (leverage ratio) and the ratio of earnings before interest expense, taxes, depreciation and amortization to interest expense (coverage ratio). Compliance with these covenants is determined quarterly based on the operating cash flows. We were in compliance with all covenants and restrictions under all our outstanding credit agreements as of December 31, 2018 and 2017, and no event of default had occurred that would permit the lenders under our outstanding credit agreements to accelerate the debt if not cured. In the future, our ability to generate sufficient operating cash flows, among other factors, will determine the amounts available to be borrowed under these facilities. As of December 31, 2018, there were no covenants or other restrictions that would have limited our ability to borrow under these facilities.

On March 9, 2017, Olin issued $500.0 million aggregate principal amount of 5.125% senior notes due September 15, 2027 (2027 Notes), which were registered under the Securities Act of 1933, as amended. Interest on the 2027 Notes began accruing from March 9, 2017 and is paid semi-annually beginning on September 15, 2017. Proceeds from the 2027 Notes were used to redeem the remaining balance of the Sumitomo Credit Facility.

On December 20, 2016, we entered into a three-year, $250.0 million Receivables Financing Agreement. Under the Receivables Financing Agreement, our eligible trade receivables are used for collateralized borrowings and continue to be serviced by us. In addition, the Receivables Financing Agreement incorporates the leverage and coverage covenants that are contained in the senior revolving credit facility. As of December 31, 2018 and 2017, $360.4 million and $340.9 million, respectively, of our trade receivables were pledged as collateral and we had $125.0 million and $249.7 million, respectively, drawn under the agreement. As of December 31, 2018, we had $125.0 million of additional borrowing capacity under the Receivables Financing Agreement. For the year ended December 31, 2017, we borrowed $40.0 million under the Receivables Financing Agreement and used the proceeds to fund a portion of the payment to DowDuPont associated with a long-term ethylene supply contract to reserve additional ethylene at producer economics. For the year ended December 31, 2016, the proceeds of the Receivables Financing Agreement were used to repay $210.0 million of the Sumitomo Credit Facility.

During 2016, $210.0 million was repaid under the Sumitomo Credit Facility using proceeds from the Receivables Financing Agreement. During 2017, the remaining balance of $590.0 million was repaid using proceeds from the Senior Credit Facility and the 2027 Notes. We recognized interest expense of $1.5 million related to the write-off of unamortized deferred debt issuance costs related to this action in 2017.

In June 2016, we repaid $125.0 million of 6.75% senior notes due 2016, which became due.

In 2018, we paid debt issuance costs of $8.5 million relating to the 2030 Notes. In 2017, we paid debt issuance costs of $11.2 million relating to the Senior Credit Facility and the 2027 Notes. In 2016, we paid debt issuance costs of $1.0 million for the registration of the $720.0 million aggregate principal amount of 9.75% senior notes due October 15, 2023 and $500.0 million aggregate principal amount of 10.00% senior notes due October 15, 2025 under the Securities Act of 1933.

Pursuant to a note purchase agreement dated December 22, 1997, SunBelt sold $97.5 million of Guaranteed Senior Secured Notes due 2017, Series O, and $97.5 million of Guaranteed Senior Secured Notes due 2017, Series G. We refer to these notes as the SunBelt Notes. The SunBelt Notes accrued interest at a rate of 7.23% per annum, payable semi-annually in arrears on each June 22 and December 22. In December 2017 and 2016, $12.2 million was repaid on these SunBelt Notes. At December 31, 2017, all amounts due under the SunBelt Notes had been repaid.

At December 31, 2018, we had total letters of credit of $74.7 million outstanding, of which $3.5 million were issued under our Senior Revolving Credit Facility. The letters of credit are used to support certain long-term debt, certain workers compensation insurance policies, certain plant closure and post-closure obligations and certain international pension funding requirements.

Annual maturities of long-term debt, including capital lease obligations, are $125.9 million in 2019, $1.8 million in 2020, $0.5 million in 2021, $743.4 million in 2022, $720.3 million in 2023 and a total of $1,706.2 million thereafter.

In April 2016, we entered into three tranches of forward starting interest rate swaps whereby we agreed to pay fixed rates to the counterparties who, in turn, pay us floating rates on $1,100.0 million, $900.0 million, and $400.0 million of our underlying floating-rate debt obligations. Each tranche’s term length is for twelve months beginning on December 31, 2016, December 31, 2017, and December 31, 2018, respectively. The counterparties to the agreements are SMBC Capital Markets, Inc., Wells Fargo Bank, N.A. (Wells Fargo), PNC Bank, National Association, and Toronto-Dominion Bank. These counterparties are large financial institutions. We have designated the swaps as cash flow hedges of the risk of changes in interest payments associated with our variable-rate borrowings. Accordingly, the remaining swap agreement has been recorded at its fair market value of $5.3 million and is included in other current assets on the accompanying consolidated balance sheet, with the corresponding gain deferred as a component of other comprehensive loss. For the years ended December 31, 2018 and 2017, $8.9 million and $3.1 million, respectively, of income was recorded to interest expense on the accompanying consolidated statements of operations related to these swap agreements.

In April 2016, we entered into interest rate swaps on $250.0 million of our underlying fixed-rate debt obligations, whereby we agreed to pay variable rates to the counterparties who, in turn, pay us fixed rates. The counterparties to these agreements are Toronto-Dominion Bank and SMBC Capital Markets, Inc., both of which are major financial institutions.

In October 2016, we entered into interest rate swaps on an additional $250.0 million of our underlying fixed-rate debt obligations, whereby we agreed to pay variable rates to the counterparties who, in turn, pay us fixed rates. The counterparties to these agreements are PNC Bank, National Association and Wells Fargo, both of which are major financial institutions.

We have designated the April 2016 and October 2016 interest rate swap agreements as fair value hedges of the risk of changes in the value of fixed rate debt due to changes in interest rates for a portion of our fixed rate borrowings. Accordingly, the swap agreements have been recorded at their fair market value of $33.7 million and are included in other long-term liabilities on the accompanying consolidated balance sheet, with a corresponding decrease in the carrying amount of the related debt. For the year ended December 31, 2018, $2.1 million of expense has been recorded to interest expense on the accompanying consolidated statements of operations related to these swap agreements. For the years ended December 31, 2017 and 2016, $2.9 million and $2.6 million, respectively, of income has been recorded to interest expense on the accompanying consolidated statements of operations related to these swap agreements.

Our loss in the event of nonperformance by these counterparties could be significant to our financial position and results of operations. Our interest rate swaps reduced interest expense by $6.8 million, $6.1 million and $3.7 million in 2018, 2017 and 2016, respectively. The difference between interest paid and interest received is included as an adjustment to interest expense.