Debt (Notes)

9 Months Ended

Sep. 30, 2018

Debt



	September 30, 2018								December 31, 2017
(Dollars in millions)	Final Maturity	Rate(s) ⁽¹⁾	Face Value			Book Value			Book Value
Secured debt
CRC Revolving Credit Facility	2022	variable ⁽²⁾	$	100		$	100		$	—
CRC Term Loan	2024	variable ⁽³⁾	4,665			4,586			4,616
CEOC LLC Revolving Credit Facility	2022	variable ⁽⁴⁾	—			—			—
CEOC LLC Term Loan	2024	variable ⁽⁵⁾	1,489			1,487			1,499
Unsecured debt
CEC Convertible Notes	2024	5.00%	1,082			1,082			1,078
CRC Notes	2025	5.25%	1,700			1,666			1,664
Special Improvement District Bonds	2037	4.30%	54			54			56
Total debt			9,090			8,975			8,913
Current portion of long-term debt			(164		)	(164		)	(64		)
Long-term debt			$	8,926		$	8,811		$	8,849

Unamortized discounts and deferred finance charges						$	115		$	121
Fair value			$	9,031

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⁽¹⁾	Interest rate is fixed, except where noted.


⁽²⁾	London Interbank Offered Rate (“LIBOR”) plus 2.00%. On May 4, 2018, the interest rate was reduced from the previous LIBOR plus 2.25% to LIBOR plus 2.13% and on August 2, 2018, the interest rate was further reduced to LIBOR plus 2.00% due to step-downs based on the senior secured leverage ratio in accordance with the CRC Credit Agreement.


⁽³⁾	LIBOR plus 2.75%.


⁽⁴⁾	LIBOR plus 2.00%.


⁽⁵⁾	LIBOR plus 2.00%. On April 16, 2018, the interest rate was repriced from the previous LIBOR plus 2.50%, see CEOC LLC Term Loan Repricing section below.

Annual Estimated Debt Service Requirements as of September 30, 2018

	Remaining		Years Ended December 31,
(In millions)	2018		2019		2020		2021		2022		Thereafter		Total
Annual maturities of long-term debt	$	16	$	164	$	64	$	64	$	64	$	8,718	$	9,090
Estimated interest payments	150		490		490		490		480		1,030		3,130
Total debt service obligation ⁽¹⁾	$	166	$	654	$	554	$	554	$	544	$	9,748	$	12,220

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⁽¹⁾	Debt principal payments are estimated amounts based on maturity dates and potential borrowings under our revolving credit facilities. Interest payments are estimated based on the forward-looking LIBOR curve and include the estimated impact of the ten interest rate swap agreements (see Note 7). Actual payments may differ from these estimates.

Current Portion of Long-Term Debt

The current portion of long-term debt as of September 30, 2018 and December 31, 2017 includes the principal payments on the term loans, other unsecured borrowings, and special improvement district bonds that are expected to be paid within 12 months.

As of September 30, 2018, $100 million was outstanding under our revolving credit facilities and $86 million was committed to outstanding letters of credit. Borrowings under the revolving credit facilities are each subject to the provisions of the applicable credit facility agreements, which each have a contractual maturity of greater than one year. Amounts borrowed, if any, under the revolving credit facilities are intended to satisfy short term liquidity needs and would be classified as current.

Fair Value

The fair value of debt has been calculated primarily based on the borrowing rates available as of September 30, 2018 based on market quotes of our publicly traded debt. We classify the fair value of debt within Level 1 and Level 3 in the fair value hierarchy.

CEOC LLC Term Loan Repricing

On April 16, 2018, CEOC LLC entered into Amendment No. 1 to the Credit Agreement, dated as of October 6, 2017 (as amended, the “CEOC LLC Credit Agreement”) that, among other things, reduced the interest rate margins applicable to CEOC LLC’s existing approximately $1.5 billion term loan facility to LIBOR plus 2.00%, from LIBOR plus 2.50%.

Terms of Outstanding Debt

Restrictive Covenants

The CRC Credit Agreement, CEOC LLC Credit Agreement, and the indenture related to the CRC Notes contain covenants which are standard and customary for these types of agreements. These include negative covenants, which, subject to certain exceptions and baskets, limit the Company’s ability to (among other items) incur additional indebtedness, make investments, make restricted payments, including dividends, grant liens, sell assets and make acquisitions. The indenture related to the CEC Convertible Notes contains covenants including negative covenants, which, subject to certain exceptions, limit the Company’s ability to (among other items) make restricted payments, including dividends and sell assets.

The CRC Revolving Credit Facility and CEOC LLC Revolving Credit Facility include maximum first-priority net senior secured leverage ratio financial covenants of 6.35:1 and 3.50:1, respectively, which are applicable solely to the extent that certain testing conditions are satisfied.

Guarantees

The borrowings under the CRC Credit Agreement and CEOC LLC Credit Agreement are guaranteed by the material, domestic, wholly owned subsidiaries of CRC and CEOC LLC, respectively, (subject to exceptions) and substantially all of the applicable existing and future property and assets that serve as collateral for the borrowings.

The CRC Notes are guaranteed on a senior unsecured basis by each wholly owned, domestic subsidiary of CRC that is a subsidiary guarantor with respect to the CRC Senior Secured Credit Facilities.