Debt

3 Months Ended

Mar. 31, 2020



	March 31, 2020								December 31, 2019
(Dollars in millions)	Final Maturity	Rates	Face Value			Book Value			Book Value
Secured debt
CRC Revolving Credit Facility	2022	variable ⁽¹⁾	$	975		$	975		$	—
CRC Term Loan	2024	variable ⁽²⁾	4,595			4,534			4,541
CEOC LLC Revolving Credit Facility	2022	variable ⁽³⁾	161			161			—
CEOC LLC Term Loan	2024	variable ⁽¹⁾	1,216			1,216			1,218
Unsecured debt
CEC Convertible Notes	2024	5.00%	1,085			1,058			1,058
CRC Notes	2025	5.25%	1,700			1,672			1,672
Special Improvement District Bonds	2037	4.30%	53			53			53
Total debt			9,785			9,669			8,542
Current portion of long-term debt			(876		)	(876		)	(64		)
Long-term debt			$	8,909		$	8,793		$	8,478

Unamortized premiums, discounts and deferred finance charges						$	116		$	123
Fair value			$	8,074

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⁽¹⁾	LIBOR plus 2.00%.


⁽²⁾	LIBOR plus 2.75%.


⁽³⁾	LIBOR plus 1.88%.

Annual Estimated Debt Service Requirements as of March 31, 2020

	Remaining		Years Ended December 31,
(In millions)	2020		2021		2022		2023		2024		Thereafter		Total
Annual maturities of long-term debt	$	864	$	49	$	359	$	49	$	6,721	$	1,743	$	9,785
Estimated interest payments	380		440		410		350		340		100		2,020
Total debt service obligation ⁽¹⁾	$	1,244	$	489	$	769	$	399	$	7,061	$	1,843	$	11,805

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⁽¹⁾	Debt principal payments are estimated amounts based on maturity dates and borrowings under our revolving credit facilities. Interest payments are estimated based on the forward-looking LIBOR curve and include the estimated effect of the ten interest rate swap agreements (see Note 6). Actual payments may differ from these estimates.

Current Portion of Long-Term Debt

The current portion of long-term debt as of March 31, 2020 and December 31, 2019 includes the principal payments on the term loans, repayments under our revolving credit facilities, other unsecured borrowings, and special improvement district bonds that are expected to be paid within 12 months. Because of our voluntary payment on the CEOC LLC term loan, we no longer have required payments; therefore, no CEOC LLC term loan payments are included in the current portion of long-term debt.

Fair Value

The fair value of debt has been calculated primarily based on the borrowing rates available as of March 31, 2020 based on market quotes of our publicly traded debt. We classify the fair value of debt within Level 1 and Level 2 in the fair value hierarchy.

Terms of Outstanding Debt

On March 16, 2020, in response to the COVID-19 public health emergency, as a precautionary measure, we announced that we had fully drawn the remaining available amounts under each of the CRC Revolving Credit Facility and CEOC Revolving Credit Facility. The total amount of the draw down was approximately $1.1 billion, a portion of which may be required to be repaid within

the next twelve months. As of March 31, 2020, approximately $64 million of our revolving credit facilities were 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. Borrowings on our revolvers are intended to satisfy short term liquidity needs, however, given the uncertainty as to the timing of our repayment, a portion of these borrowings are classified as long term based on the terms of the credit agreements. We have classified $826 million of our outstanding revolving credit facilities as current until waivers of our financial covenants, discussed below, are obtained.

Restrictive Covenants

The CRC Credit Agreement, CEOC LLC Credit Agreement, as amended, and the indentures 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 ability of CRC and certain of its subsidiaries, and CEOC LLC and certain of its subsidiaries, respectively, 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) incur additional indebtedness, make investments, make restricted payments, including dividends, grant liens, sell assets, and make acquisitions.

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. A covenant violation could result in a portion of our revolving credit facilities to be repaid within twelve months. As of March 31, 2020, we are in compliance with the covenants related to our debt instruments.

The calculation of the net senior secured leverage ratio for the CRC Revolving Credit Facility and the CEOC LLC Revolving Credit Facility is dependent on EBITDA, as defined by the respective agreement. Due to the closure of our properties, EBITDA has been significantly affected whereby it is reasonably possible that we would be unable to maintain compliance with the financial covenants thereunder. Our lenders have agreed to waive these financial covenants through September 30, 2021, however, final approvals are not yet in place. The waivers will require us to maintain minimum cash amounts, including any such availability under our revolving credit facilities (the “Minimum Cash Requirement”). The CRC Revolving Credit Facility and CEOC Revolving Credit Facility will have a Minimum Cash Requirement of $200 million and $275 million, respectively.

Guarantees

The borrowings under the CRC Credit Agreement and CEOC LLC Credit Agreement, as amended, 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 of CRC or CEOC LLC, respectively, and their respective subsidiary guarantors serve as collateral for the respective 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.