Short-Term and Long-Term Debt

12 Months Ended

Oct. 31, 2020

New 2025 Term Loan

The net carrying values of Ciena’s term loan were comprised of the following for the fiscal periods indicated (in thousands):


	October 31, 2020								November 2, 2019
	Principal Balance		Unamortized Discount		Deferred Debt Issuance Costs		Net Carrying Value		Net Carrying Value
New 2025 Term Loan	$	687,802	$	(1,577)	$	(2,939)	$	683,286	$	—
Old 2025 Term Loan	$	—	$	—	$	—	$	—	$	687,406

Deferred debt issuance costs deducted from the carrying amount of the term loan totaled $2.9 million at October 31, 2020 and $3.6 million at November 2, 2019. Deferred debt issuance costs are amortized using the straight-line method, which approximates the effect of the effective interest rate method, through the maturity of the term loan. The amortization of deferred debt issuance costs for this term loan is included in interest expense, and was $0.6 million during each of fiscal 2020 and fiscal 2019.

As of October 31, 2020, the estimated fair value of the term loan was $686.1 million. Ciena’s term loan is categorized as Level 2 in the fair value hierarchy. Ciena estimated the fair value of its term loan using a market approach based on observable inputs, such as current market transactions involving comparable securities.

On September 28, 2018, Ciena, as borrower, and Ciena Communications, Inc. and Ciena Government Solutions, Inc., as guarantors, entered into an Increase Joinder and Refinancing Amendment to Credit Agreement with the lenders party thereto and the Administrative Agent, pursuant to which Ciena refinanced its term loan maturing on January 30,2022 (the “2022 Term Loan”) into term loan maturing on September 28, 2025 (the “Old 2025 Term Loan”). In connection with the transaction, Ciena received a loan in the amount of $699.1 million, net of original discount, from the Old 2025 Term Loan and simultaneously repaid $394.0 million of outstanding principal under the 2022 Term Loan, resulting in proceeds of $305.1 million. On January 23, 2020, Ciena entered into a Refinancing Amendment to Credit Agreement pursuant to which Ciena refinanced the entire outstanding amount of the Old 2025 Term Loan with an outstanding aggregate principal amount of $693.0 million as of January 23, 2020 and incurred a new senior secured term loan in an aggregate principal amount of $693.0 million and maturing on September 28, 2025 (the “New 2025 Term Loan”). The New 2025 Term Loan requires Ciena to make installment payments of $1.73 million on a quarterly basis. Based on the continuation of existing lenders, this arrangement was primarily accounted for as a modification of debt and, as such, $0.4 million of debt issuance costs associated with the New 2025 Term Loan were expensed. The aggregate balance of $3.4 million of debt issuance costs and approximately $1.9 million of original discount from the Old 2025 Term Loan are included in the carrying value of the New 2025 Term Loan.

The Refinancing Amendment to Credit Agreement amends Ciena’s credit agreement, dated July 15, 2014, as amended (the “Credit Agreement”) and provides that the New 2025 Term Loan will, among other things:

•amortize in equal quarterly installments in aggregate amounts equal to 0.25% of the principal amount of the New 2025 Term Loan as of January 23, 2020, with the balance payable at maturity;

•be subject to mandatory prepayment provisions upon the occurrence of certain specified events substantially similar to the 2022 Term Loan, including certain asset sales, debt issuances and receipt of annual Excess Cash Flow (as defined in the Credit Agreement);

•bear interest, at Ciena’s election, at a per annum rate equal to (a) LIBOR (subject to a floor of 0.00%) plus an applicable margin of 1.75%, or (b) a base rate (subject to a floor of 1.00%) plus an applicable margin of 1.00%; and

•be repayable at any time at Ciena’s election, provided that repayment of the New 2025 Term Loan with proceeds of certain indebtedness prior to July 23, 2020 will require a prepayment premium of 1.00% of the aggregate principal amount of such prepayment.

ABL CREDIT FACILITY

Ciena Corporation and certain of its subsidiaries are parties to the ABL Credit Facility, which provides for a total commitment of $300 million with a maturity date of October 28, 2024. The ABL Credit Facility was entered into on October 28, 2019 and replaced a predecessor senior secured asset-based revolving credit facility. Ciena principally uses the ABL Credit Facility to support the issuance of letters of credit that arise in the ordinary course of its business and thereby to reduce its use of cash required to collateralize these instruments.

As of October 31, 2020, letters of credit totaling $83.0 million were outstanding under the ABL Credit Facility. There were no borrowings outstanding under the ABL Credit Facility as of October 31, 2020.