DEBT AND CAPITAL LEASE OBLIGATIONS

1.75% CONVERTIBLE DEBENTURES

In October 2012, the Company issued $396.75 million aggregate principal amount of 1.75% senior unsecured convertible debentures due October 15, 2032 (1.75% debentures). Each $1,000 principal amount of these 1.75% debentures is initially convertible, under certain circumstances and during certain periods, into 60.4961 shares (subject to customary anti-dilution adjustments) of the Company's common stock, which represents an initial conversion price of $16.53 per share. The 1.75% debentures also include an embedded conversion enhancement feature that is equivalent to including each debenture with a warrant initially exercisable for 30.2481 shares at an exercise price of $16.53 per share (also subject to customary anti-dilution adjustments). The Company, at its election, may settle conversions of the 1.75% debentures in cash, shares of its common stock or any combination of cash and shares of its common stock.

Holders have the right to redeem their 1.75% debentures at face value plus accrued and unpaid interest on October 15th, of each of 2019, 2024, 2029, and upon the occurrence of certain corporate events. The Company will have the right to call the 1.75% debentures at any time on or after October 20, 2019.

The 1.75% debentures were bifurcated under U.S. GAAP into separate debt and equity components, and reflect an effective maturity (to the first optional redemption date) of seven years. The residual amount of $141.6 million recorded in equity is treated for accounting purposes as additional debt discount and accreted as an additional non-cash interest charge to earnings over the expected life. Debt and equity issuance costs totaling approximately $12.4 million were deducted from the gross proceeds of the offering of the 1.75% debentures, and the debt portion is being amortized ratably over seven years. Net proceeds of $384.3 million from the offering were used in part to retire $164.3 million of the Company's 1.875% convertible debentures upon their redemption in March 2013 with the remainder being used for general corporate purposes.

In the third quarter of 2015, the Company repurchased $61.6 million of the outstanding principal of the 1.75% debentures, due 2032, paying cash of $59.4 million. The Company reduced the debt component by $50.7 million, which includes a reduction of the debt discount by $10.9 million. The difference between the book value and the fair value (including $0.7 million of debt and equity issuance costs) of the debt component resulted in a $4.2 million loss, recorded in Loss on extinguishment of debt, net in the Company's Consolidated Statements of Comprehensive (Loss) Income.

The 1.75% debentures have an effective interest rate of 8.50% and a stated interest rate of 1.75% with interest paid semi-annually. The balance outstanding at September 30, 2015 and December 31, 2014, was approximately $254.2 million and $291.1 million, respectively, which is net of unamortized discount of $81.0 million and $105.6 million, respectively.

1.875% CONVERTIBLE DEBENTURES

Holders of the remaining $0.5 million of outstanding 1.875% debentures may require the Company to redeem their 1.875% debentures at face value on March 15, 2018 or March 15, 2023, or at any time before March 15, 2028 upon the occurrence of certain events including a change in control. Effective March 22, 2013, the Company has the right at its discretion to redeem the remaining $0.5 million of outstanding 1.875% debentures for cash at any time prior to maturity. The outstanding balance at September 30, 2015 and December 31, 2014, of $0.5 million aggregate principal amount, is reported as a long-term debt obligation.

In the third quarter of 2015, the Company repurchased $1.7 million of the outstanding principal of the 1.875% debentures, due 2028, paying cash of $1.6 million and recording a gain of approximately $0.1 million, recorded in Loss on extinguishment of debt, net the Company's Consolidated Statements of Comprehensive (Loss) Income.

ASSET-BACKED REVOLVING CREDIT FACILITY

In December 2011, the Company signed a $100.0 million asset-backed revolving credit agreement incurring debt issuance costs of $1.1 million. In January 2012, the Company completed the syndication of this facility and simultaneously expanded its maximum line of credit to $125.0 million, incurring additional debt issuance costs of $0.2 million. Borrowings under this working capital credit facility are limited to a borrowing base equal to the sum of 85% of eligible accounts receivable and 70% of eligible inventories. Terms of the credit agreement state that the borrowings will be secured by the Company's accounts receivable, metals inventories and other accounts. The asset-backed revolving credit facility includes a single fixed-charge coverage covenant that only takes effect when less than 30% of the total borrowing capacity under the facility remains available. The facility includes a $60.0 million letter of credit sub-facility. Outstanding borrowings under the facility accrue interest at a spread over the London Interbank Offer Rate that varies from 2.25% to 2.75%, decreasing progressively as the percentage drawn under the facility increases. The Company also pays a commitment fee on committed but un-utilized borrowing capacity available under the facility at a rate per annum of 0.375% or 0.5%, depending on the amount of the facility drawn.

At September 30, 2015 and 2014, there were no outstanding borrowings under this revolving credit facility, and approximately $17.5 million in undrawn irrevocable letters of credit had been issued under this facility as collateral for sureties, which reduce the amount available for borrowing under the facility on a dollar-for-dollar basis.

The following table reflects the amortization of debt issuance costs, interest expense and cash payments on the Company's outstanding debt for the three- and nine-month periods ended September 30, 2015 and 2014:



	Three months ended				Nine months ended
	September 30,				September 30,
(In thousands)	2015		2014		2015		2014
1.75% Convertible Debentures
Amortization of debt issuance costs	$	240	$	287	$	714	$	852
Interest expense	$	6,262	$	6,074	$	18,860	$	17,931
Cash payments for interest	$	423	$	—	$	3,894	$	3,472

1.875% Convertible Debentures
Interest expense	$	9	$	11	$	30	$	32
Cash payments for interest	$	21	$	21	$	42	$	42

Asset-Backed Revolving Credit Facility
Amortization of debt issuance costs	$	69	$	69	$	204	$	204
Fees	$	253	$	260	$	839	$	765

The Company's total current and long-term debt balances at September 30, 2015 and December 31, 2014 were as follows:



	September 30, 2015					December 31, 2014
(In thousands)	Current		Long-Term			Current		Long-Term
1.75% Convertible Debentures
Aggregate principal	$	—	$	335,150		$	—	$	396,750
Debt discount	—		(80,990		)	—		(105,634		)
Debt balance	—		254,160			—		291,116
1.875% Convertible Debentures	—		524			—		2,245
Capital Lease Obligation	1,107		—			2,067		580
Small Land Purchase	78		—			77		82
Total debt balances	$	1,185	$	254,684		$	2,144	$	294,023

EXEMPT FACILITY REVENUE BONDS

During 2000, the Company completed a $30.0 million offering of 8.0% Exempt Facility Revenue Bonds, Series 2000. These bonds were issued by the State of Montana Board of Investments to finance a portion of the costs of constructing and equipping certain sewage and solid waste disposal facilities at both the Stillwater Mine and the East Boulder Mine. The bonds were scheduled to mature on July 1, 2020, and had a stated interest rate of 8.0% per annum with interest paid semi-annually. Net discounted proceeds from the offering were $28.7 million, yielding an effective rate of 8.57%.

In July 2014, the Company redeemed the entire $30.0 million of 8.0% Exempt Facility Revenue Bonds, Series 2000, which included the payment of accrued and unpaid interest of $40,000.

CAPITAL LEASE OBLIGATIONS

The Company is party to a lease agreement with General Electric Capital Corporation covering the acquisition of a tunnel-boring machine (TBM) for use on the Blitz development adjacent to the Stillwater Mine. The transaction is structured as a capital lease with a four-year term maturing in 2016; lease payments are due quarterly in advance. The Company made cash payments of $0.5 million on its capital lease obligations in each of the three-month periods ended September 30, 2015 and 2014, respectively, and cash payments of $1.6 million on its capital lease obligations in each of the nine-month periods ended September 30, 2015 and 2014, respectively. The cash payments in each of the three- and nine-month periods ended September 30, 2015 and 2014, included interest of less than $0.1 million. At September 30, 2015, and December 31, 2014, the outstanding balance under the capital lease was $1.1 million and $2.6 million, respectively.

The following is a schedule by year of the future minimum lease payments for the capital lease together with the present value of the net minimum lease payments:



(In thousands)
2015	$	542
2016	589
Total minimum lease payments	1,131
Interest at rates ranging from 5.21% to 5.46% (before-tax)	(24		)
Net minimum lease payments	$	1,107

CAPITALIZED INTEREST

The Company capitalizes interest incurred on its various debt instruments as a cost of specific and identified areas under development. For the three-month periods ended September 30, 2015 and 2014, the Company capitalized interest of $1.5 million and $1.4 million, respectively. For the nine-month periods ended September 30, 2015 and 2014, the Company capitalized interest of $4.2 million and $3.6 million, respectively. Capitalized interest is recorded as a reduction to Interest expense in the Company's Consolidated Statements of Comprehensive (Loss) Income.