NOTES PAYABLE

As of December 31, 2017 and 2016, notes payable consisted of the following:



(in millions)	December 31, 2017			December 31, 2016			Annual Contractual Interest Rate			Effective Interest Rate		Maturity Date
Term loan A	$	303		$	330		3.95	%	⁽¹⁾	4.07	%	July 2019
Term loan A-2	122			132			3.83	%	⁽²⁾	3.90	%	July 2019
Total term loans	425			462
Deferred loan costs	(2		)	(3		)
Less: current portion	(40		)	(37		)
Non-current term portion	$	383		$	422


(1)	Bears interest at LIBOR plus 2.25% or the prime rate plus 1.25% at our option, subject to certain rate adjustments based upon our total leverage ratio.


(2)	Bears interest at LIBOR plus 2.125% or the prime rate plus 1.125% at our option, subject to certain rate adjustments based upon our total leverage ratio.

In July 2016, we refinanced our Amended and Restated First Lien Credit Agreement (Credit Agreement). We replaced $135 million of outstanding tranche B term loans maturing July 2017 with substantially the same amount of new tranche A-2 term loans maturing July 2019. The $342 million of existing tranche A term loans and the $75 million revolving credit facility were not refinanced. As part of the $135 million refinancing transaction, $58 million was recorded as an extinguishment, and $77 million was rolled over into the new tranche A-2 term loans and was treated as a debt modification.

The proceeds of the tranche A-2 term loans were used to: (i) refinance the remaining tranche B term loans outstanding under the Credit Agreement and (ii) pay related fees and expenses. As a result of refinancing our syndicated loan, approximately $1 million in fees and costs were incurred, of which a portion was recorded as deferred loan costs for continuing lenders with the remainder expensed for those lenders no longer included in the loan syndicate.

Interest on term loans is payable quarterly. We are required to pay a quarterly commitment fee of 0.50% which may decrease to 0.38% based on our total leverage ratio, on the daily unused amount of the commitments under the revolving credit facility, as well as fronting fees and other customary fees for letters of credit issued under the revolving credit facility.

We are permitted to make voluntary prepayments at any time without payment of a premium. We are required to make mandatory prepayments of term loans (without payment of a premium) with (i) net cash proceeds from issuances of debt (other than certain permitted debt), and (ii) net cash proceeds from certain non-ordinary course asset sales and casualty and condemnation proceeds (subject to reinvestment rights and other exceptions).

The tranche A and A-2 term loans will be repaid in quarterly installments in aggregate annual amounts as follows (in millions):



	Year ending December 31,
	2018		2019		Total
Term loan repayments	$	42	$	383	$	425

The Credit Agreement contains customary representations and warranties, and customary affirmative and negative covenants applicable to us, including, among other things, restrictions on indebtedness, liens, investments, mergers, and other dispositions.

Our credit facility is free of net income restrictions. In addition, our credit facility permits us to make customary payments that would otherwise be restricted, such as day-to-day intragroup payments or dividends and repurchase of shares granted under our equity plans.

The Credit Agreement restricts our ability to make certain types of payments including dividends and stock repurchases and other similar distributions, though such payments may generally be made as long as our total leverage ratio remains below 3.00 to 1.00 and there exists no default under the Credit Agreement.

The financial covenants under the Credit Agreement require us to maintain a minimum consolidated interest coverage ratio of at least 3.50 to 1.00 at December 31, 2017 and 2016 and a maximum total leverage ratio of 3.75 to 1.00 and 4.25 to 1.00 at December 31, 2017 and 2016, respectively. We were in compliance with these financial covenants under the credit facilities at December 31, 2017 and 2016.

The credit facility is secured by substantially all of our assets, other than excluded assets as defined in the Credit Agreement, which includes certain customary assets, assets held in trusts as collateral and WSE related assets.

The Company has a $75 million revolving credit facility. For additional information regarding these facilities, refer to Note 13 in this Form 10-K.