Long-Term Debt

9 Months Ended

Sep. 30, 2012

Long-Term Debt.

Long-Term Debt

Note 4. Long-Term Debt

In July 2012, we entered into a credit agreement which provides an unsecured Euro-denominated term loan facility in an amount up to €365.0 million, or approximately $469.6 million based on the exchange rate at September 30, 2012.  We have the ability to draw on this facility at anytime on or prior to June 30, 2013.  As of October 25, 2012, we have not drawn on this facility.  All amounts borrowed under the facility will be due and payable at maturity in July 2017.  Interest on the loan accrues at a floating rate based on EURIBOR plus the applicable margin.  The applicable margin varies with our debt rating and would be 3.0% as of September 30, 2012.  In addition, we are subject to a commitment fee of 1.05% per annum of the undrawn amount.  We anticipate the proceeds from this loan facility will be used primarily as part of our refinancing strategy for our bond maturities in 2013 and 2014.  In connection with entering into this facility, we prepaid our $100.0 million unsecured floating rate term loan due September 2013.

In August 2012, we borrowed $290.0 million under an unsecured term loan.  All amounts borrowed under the facility will be due and payable at maturity in February 2016.  Interest on the loan accrues at a floating rate based on LIBOR plus the applicable margin. The applicable margin varies with our debt rating and was 2.5% as of September 30, 2012.  The proceeds of this loan were used to reduce outstanding balances on our revolving credit facilities.

During the first nine months of 2012, we increased the capacity of our revolving credit facility due July 2016 by $233.0 million, bringing our total capacity under this facility to $1.1 billion as of September 30, 2012. We also have a revolving credit facility due November 2014 with capacity of $525.0 million as of September 30, 2012, giving us aggregate revolving borrowing capacity of $1.6 billion.

In September 2012, we repurchased €255.0 million or approximately $328.0 million in aggregate principal amount of our €1.0 billion 5.625% unsecured senior notes due 2014 through a debt tender offer conducted outside of the United States.  Total consideration paid in connection with the tender offer, including premium and related fees and expenses was $344.2 million.  The repurchase of the unsecured senior notes resulted in a loss on the early extinguishment of debt of approximately $7.5 million which was recognized in earnings immediately and is reported within extinguishment of unsecured senior notes in our consolidated statement of comprehensive income (loss).

Certain of our unsecured ship financing term loans are guaranteed by the export credit agency in the respective country in which the ship is constructed.  In consideration for these guarantees, depending on the financing arrangement, we pay to the applicable export credit agency fees that range from either (1) 0.88% to 1.48% per annum based on the outstanding loan balance semi-annually over the term of the loan (subject to adjustment in certain of our facilities based upon our credit ratings) or (2) an upfront fee of approximately 2.3% to 2.37% of the maximum loan amount. We amortize the fees that are paid upfront over the life of the loan and those that are paid semi-annually over each respective payment period.  We classify these fees within Debt issuance costs in our consolidated statement of cash flows and within Other Assets in our consolidated balance sheets.

Under certain of our agreements, the contractual interest rate, facility fee and/or export credit agency fee vary with our debt rating.