Debt

Total debt as of December 31 consisted of the following:



(millions)	2014		2013
5.875% senior notes due 2021	$	350	$	350
6.3% senior notes due 2016	500		500
7.75% senior notes due 2018	500		500
7.875% senior notes due 2020 (net of discount: 2014 - $1; 2013 - $1)	249		249
8.375% senior notes due 2018	350		350
9.75% senior notes due 2014	—		59
10% convertible senior notes due 2018 (net of discount: 2013 - $3)	—		72
Ship mortgage facility (includes current portion of long-term debt: 2014 - $4; 2013 - $4)	21		25
Credit facilities of Oman joint ventures	—		11
Industrial revenue bonds (due 2028 through 2034)	239		239
Total	$	2,209	$	2,355

Debt Repayment

On August 1, 2014, we repaid the remaining of $59 million of principal balance of our 9.75% senior notes due 2014.

Senior Notes

All of the senior notes are senior unsecured obligations and rank equally with all of our other existing and future unsecured senior indebtedness. The indentures governing the notes contain events of default, covenants and restrictions that are customary for similar transactions, including a limitation on our ability and the ability of certain of our subsidiaries to create or incur secured indebtedness.

Our obligations under the 5.875%, 7.875%, and 8.375% senior notes are guaranteed on a senior unsecured basis by certain of our domestic subsidiaries. All of these senior notes contain a provision requiring us to offer to purchase those notes at a premium of 101% of their principal amount (plus accrued and unpaid interest) in the event of a change in control. The 7.75% and 6.3% senior notes contain a provision requiring us to offer to purchase those notes at a premium of 101% of their principal amount (plus accrued and unpaid interest) in the event of a change in control and a related downgrade of the rating on the notes to below investment grade by both Moody’s Investors Service and Standard & Poor’s Financial Services LLC.

The interest rate payable on the 7.75% senior notes is subject to adjustment from time to time by up to 2% in the aggregate if the debt ratings assigned to the notes are upgraded or thereafter downgraded. There have been no adjustments to the amount of interest rate payable during the years ending December 31, 2014, 2013 or 2012.

The 6.3% and 7.75% senior notes contain a provision that allows us to redeem the notes in whole at any time, or in part from time to time, at our option, at a redemption price equal to the greater of (1) 100% of the principal amount of the notes being redeemed and (2) the sum of the present value of the remaining scheduled payments of principal and interest on the notes being redeemed discounted to the redemption date on a semi-annual basis at the applicable U.S. Treasury rate plus a spread (as outlined in the respective indentures), plus, in each case, any accrued and unpaid interest on the principal amount being redeemed to the redemption date.

The 8.375% senior notes contain a similar provision that allows us to redeem those notes, in whole or in part from time to time, at our option, on or after October 15, 2014 at stated redemption prices, plus any accrued and unpaid interest to the redemption date.

The 7.875% senior notes contain a similar provision that allows us to redeem those notes, in whole or in part from time to time, at our option, on or after March 30, 2016 at stated redemption prices, plus any accrued and unpaid interest to the redemption date. In addition, we may redeem the notes in whole or in part from time to time, at our option, prior to March 30, 2016 at a redemption price equal to 100% of the principal amount of the notes being redeemed plus a premium (as specified in the supplemental indenture with respect to those notes), plus any accrued and unpaid interest.

The 5.875% senior notes contain a similar provision that allows us to redeem those notes, in whole or in part from time to time, at our option, on or after November 1, 2016 at stated redemption prices, plus any accrued and unpaid interest to the redemption date. In addition, we may redeem the notes in whole or in part from time to time, at our option, prior to November 1, 2016 at a redemption price equal to 100% of the principal amount of the notes redeemed plus a premium (as specified in the supplemental indenture with respect to those notes), plus any accrued and unpaid interest.

Conversion of Convertible Senior Notes

In November 2013, we issued a notice of redemption to redeem $325 million in aggregate principal amount of our 10% convertible senior notes due 2018 at the stated redemption price of 105%. The notes could either be (1) redeemed at a stated redemption price or (2) converted into shares of our common stock. In December 2013, the holders of all $325 million in notes called for redemption elected to convert their notes into shares of our common stock. Accordingly, we issued an additional 28,508,768 shares of our common stock in connection with the conversion of the notes. As of December 31, 2013, we had $75 million aggregate principal amount of 10% convertible senior notes due 2018 that were recorded on the consolidated balance sheet at $72 million, net of debt discount of $3 million.

In March 2014, we issued a notice of redemption to redeem the remaining $75 million in aggregate principal amount of outstanding notes. The holders of all $75 million in notes called for redemption elected to convert their notes into shares of USG’s common stock. Accordingly, in April 2014, we issued an additional 6,578,946 shares of our common stock in connection with the conversion of the notes.

Affiliates of Berkshire Hathaway, Inc., who own approximately 30% of our outstanding shares of common stock as of December 31, 2014, held $300 million of these notes, prior to the December 2013 and April 2014 conversion. As of December 31, 2013, affiliates of Berkshire Hathaway, Inc. held $56 million of these notes, which are reflected on our consolidated balance sheet, net of unamortized debt discount, at $54 million. Our consolidated statements of operations include the related interest expense of $2 million for the year ended December 31, 2014, $29 million for the year end ended December 31, 2013, and $31 million for the year ended December 31, 2012, including the related accretion of the original debt discount. Our consolidated balance sheet as of December 31, 2013 includes the related accrued interest, in accrued expenses, of $0.5 million.

2012 Repurchase of 9.75% Senior Notes and Issuance of 7.875% Senior Notes

On April 12, 2012, we completed a cash tender offer pursuant to which we repurchased approximately $118 million of our 9.75% senior notes due in 2014 for aggregate consideration, including tender offer premium and accrued and unpaid interest, of approximately $136 million. Subsequent to the completion of the cash tender offer, we repurchased an additional $123 million of these notes in privately negotiated transactions, for aggregate consideration, including premiums and accrued and unpaid interest, of $145 million. As a result of the repurchases, in the second quarter of 2012, we recorded a loss on early extinguishment of debt of $41 million, including premiums, the write-off of unamortized debt discount and deferred financing fees. There were no amounts outstanding related to these notes at December 31, 2014. Also on April 12, 2012, we issued $250 million of 7.875% senior notes due March 30, 2020. The net proceeds from the issuance of these notes and cash on hand were used to fund the repurchases of the 9.75% senior notes and all related costs and expenses. We deferred $5 million of financing costs which we are amortizing to interest expense over the term of the notes. As of December 31, 2014 and 2013, these notes are recorded on the consolidated balance sheet at $249 million, net of unamortized debt discount of $1 million.

Credit Facility

On October 22, 2014, we amended and restated our credit facility in order to, among other things, join CGC, Inc., or CGC, as a party and to increase the maximum borrowing limit under the credit agreement from $400 million to $450 million (including a $50 million borrowing sublimit for CGC). As amended and restated, the credit agreement allows for the borrowing of revolving loans and issuance of letters of credit (up to a maximum of $200 million at any time outstanding, in aggregate) to USG and its subsidiaries. Pursuant to the credit agreement, the maximum principal amount of revolving loans and letters of credit that may be borrowed by and/or be issued in favor USG and CGC at any time may fluctuate based upon two separate borrowing base calculations. The maximum allowable borrowings may be increased at our request with the agreement of the lenders providing increased or new lending commitments, provided that the maximum allowable borrowings after giving effect to the increase may not exceed $650 million.

USG's obligations under the credit facility are guaranteed by USG and its significant domestic subsidiaries and secured by their and USG’s trade receivables and inventory. CGC's obligation's under the credit facility are secured by trade receivables and inventory of certain subsidiaries. The credit facility matures on October 22, 2019 unless terminated earlier in accordance with its terms. The credit facility is available to fund working capital needs and for other general corporate purposes.

The credit agreement contains a financial covenant that would require us to maintain a minimum fixed charge coverage ratio of not less than 1.0 to 1.0 if the excess of availability (as defined in the credit agreement) is less than an amount equal to 10% of the lesser of (a) the aggregate revolving commitment at such time and (b) the aggregate borrowing base at such time. We would be required to continue to comply with such financial covenant until availability under the credit agreement exceeds such minimum threshold for 30 consecutive calendar days thereafter. As of December 31, 2014, our fixed charge coverage ratio was 1.18-to-1. Because we currently satisfy the required fixed charge coverage ratio, we are not required to maintain a minimum borrowing availability under the credit facility. The credit agreement contains other covenants and events of default that are customary for similar agreements and may limit our ability to take various actions. The credit agreement limits our ability to pay a dividend or repurchase our stock.

Taking into account the most recent borrowing base calculation delivered under the credit facility, which reflects trade receivables and inventory as of December 31, 2014, and outstanding letters of credit, borrowings available under the credit facility were approximately $291 million, including $50 million for CGC. As of December 31, 2014 and during the year then-ended, there were no borrowings under the facility. Had there been any borrowings as of that date, the applicable interest rate would have been 2.01% for loans in the US and 3.05% for loans in Canada. Outstanding letters of credit totaled $54 million, including $0.8 million for CGC, as of December 31, 2014.

Oman Credit Facilities

In June 2013, our joint ventures in Oman, which at the time and prior to their contribution to UBBP were fully consolidated, each entered into separate secured credit agreements, which are guaranteed by us and our joint venture partner. The credit agreement for Zawawi Gypsum LLC, or ZGL, which matures in 2020, provides for term loans not to exceed $10 million and overdraft and letter of credit facilities of approximately $3 million in the aggregate. The credit agreement for USG-Zawawi Drywall LLC, or ZDL, which matures in 2022, provides for term loans not to exceed $26 million and overdraft and letter of credit facilities of $5 million in the aggregate. Each credit agreement is secured by a general security interest in the applicable joint venture's assets. Loans under the credit agreements may be made in Omani Rial or U.S. dollars. Loans made in Omani Rial bear interest at 4% and loans made in U.S. dollars bear interest at a floating rate based on LIBOR plus 3.5%. Loans may be repaid at any time, subject to a prepayment penalty if repaid within the first two years, for ZGL, or three years, for ZDL. See Note 19 for discussion of our contribution of ZGL and ZDL, and the corresponding Oman credit facilities, into UBBP on February 27, 2014. See further description of our investments in UBBP in Note 3.

Ship Mortgage Facility

Our subsidiary, Gypsum Transportation Limited, or GTL, has a secured loan facility agreement with DVB Bank SE, as lender, agent and security trustee. Both advances provided for under the secured loan facility have been drawn, and the total outstanding loan balances under the facility were $21 million as of December 31, 2014 and $25 million as of December 31, 2013. Of the total amounts outstanding on our consolidated balance sheets as of December 31, 2014 and December 31, 2013, $4 million was classified as current portion of long-term debt as of both financial statement dates.

The loan balance under the secured loan facility bears interest at a floating rate based on LIBOR plus a margin of 1.65%. The interest rate was 1.97% as of December 31, 2014. Each advance is repayable in quarterly installments in amounts determined in accordance with the secured loan facility agreement, with the balance of each advance repayable eight years after the date it was advanced, or October 31, 2016 and May 22, 2017. The secured loan facility agreement contains affirmative and negative covenants affecting GTL and certain customary events of default. GTL has granted DVB Bank SE a security interest in the Gypsum Centennial and Gypsum Integrity ships and related insurance, contract, account and other rights as security for borrowings under the secured loan facility. USG Corporation has guaranteed the obligations of GTL under the secured loan facility and has agreed to maintain liquidity of at least $175 million. See Note 14 for discussion of GTL and related subsequent event.

Industrial Revenue Bonds

Our $239 million of industrial revenue bonds have fixed interest rates ranging from 5.5% to 6.4%. The weighted average rate of interest on our industrial revenue bonds is 5.875%. These bonds mature during the years 2028 through 2034.

OTHER INFORMATION

The fair value of our debt was $2.338 billion as of December 31, 2014 and $2.659 billion as of December 31, 2013 and was determined using the fair value hierarchy of inputs described in Note 1. The fair values were based on quoted prices for identical or similar liabilities in markets that are not active or valuation models in which all significant inputs and value drivers are observable and, as a result, are classified as Level 2.

Interest accrued on our debt as of December 31, 2014 and December 31, 2013 was $45 million and $48 million, respectively.

As of December 31, 2014, we were in compliance with the financial covenants contained in our credit facilities.

As of December 31, 2014, the amounts of total debt outstanding maturing in each of the next five years and beyond were as follows:



(millions)	2015		2016		2017		2018		2019		After 2019
Debt maturities	$	6	$	507	$	8	$	850	$	—	$	839