Interest Expense

9 Months Ended

Sep. 30, 2023

Interest and Debt Expense [Abstract]

Interest Expense

Interest Expense

The following table presents the components of interest expense: 

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Dollars in thousands)
Interest incurred on debt	$	17,154	$	10,458	$	39,101	$	32,743
Accretion of original issue discount	526		178		2,002		1,043
Amortization of debt issuance costs	740		642		3,883		2,818
Amortization of interest rate swap deferred gains	(2,701)		—		(2,746)		—
Realized gain on termination of de-designated interest rate swap	—		(4,605)		(6,918)		(4,605)
Unrealized (gain) loss on de-designated interest rate swap	—		(249)		7,110		(6,964)
Total interest expense	$	15,719	$	6,424	$	42,432	$	25,035

In June 2023, the net proceeds from the issuance of the 2023 Senior Secured Notes were used to repay the $433.7 million of principal outstanding on the 2018 Term Loan Facility. The repayment of the 2018 Term Loan Facility was accounted for as a debt extinguishment and triggered $1.2 million of accelerated accretion of the original issue discount and $1.9 million of accelerated amortization of debt issuance costs. The 2023 Senior Secured Notes were accounted for as new debt and the related discount and debt issuance costs were deferred.

In connection with the repayment of the 2018 Term Loan Facility in June 2023, we terminated the outstanding interest rate swap contracts that were in place to fix the cash flows associated with the risk in variability in the one-month USD London Interbank Offered Rate (“USD LIBOR”) for the 2018 Term Loan Facility. As a result of the swaps termination, we recorded in interest expense realized gains of $6.9 million relative to our de-designated swap and we deferred realized gains of $13.5 million in accumulated other comprehensive income (“AOCI”) in connection with our designated swap. The gains deferred into AOCI for the designated swap will amortize into interest expense until August 2024, consistent with the term of the discontinued cash-flow hedging relationship.

The 2023 Senior Secured Notes and the 2020 Senior Secured Notes carry fixed interest rates of 9.875% and 4.625%, respectively. The 2018 Term Loan Facility, which was paid off in its entirety in June 2023, had an effective interest rate of 7.38% as of December 31, 2022.

During the nine months ended September 30, 2022, we made voluntary prepayments of $110.0 million under our 2018 Term Loan Facility. In connection with this, we recorded $0.5 million of accelerated accretion of the original issue discount and $0.8 million of accelerated amortization of the debt issuance cost. We did not make any voluntary prepayments under our 2018 Term Loan Facility in the third quarter of 2022.

See Note 4, “Debt and Liquidity” for details of our debt and Note 9, “Fair Value Measurements and Derivative Instruments” for additional details on our interest rate swaps and embedded derivative.