ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾

7. DEBT

Ìý

Outstanding debt, net of debt issuance costs, consisted of the following (dollars in millions):

Ìý

ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ Corporation

Ìý

Ìý

ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International

Ìý

Ìý

DIRECT AND SUBSIDIARY DEBT

Ìý

ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ Corporation’s direct debt and guarantee obligations consist of a guarantee of certain indebtedness incurred from time to time to finance certain insurance premiums. Substantially all of our other debt, including the facilities described below, has been incurred by our subsidiaries (primarily ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International). ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ Corporation is not a guarantor of such subsidiary debt.

Ìý

Certain of our subsidiaries are designated as nonguarantor subsidiaries (“Nonguarantors�) and have third‑party debt agreements. These debt agreements contain certain restrictions with regard to dividends, distributions, loans or advances. In certain circumstances, the consent of a third party would be required prior to the transfer of any cash or assets from these subsidiaries to us.

Ìý

Debt Issuance Costs

Ìý

We record debt issuance costs related to a debt liability on the balance sheet as a reduction in the face amount of that debt liability. As of March 31, 2017 and December 31, 2016, the amount of debt issuance costs directly reducing the debt liability was $55 million and $57 million, respectively. We record the amortization of debt issuance costs as interest expense.

Ìý

Senior Credit Facilities

Ìý

As of March 31, 2017, our senior credit facilities (“Senior Credit Facilities�) consisted of our Revolving Facility, our 2021 Term Loan B and our 2023 Term Loan as follows: (dollars in millions):

Ìý

Ìý

Ìý

Our obligations under the Senior Credit Facilities are guaranteed by substantially all of our domestic subsidiaries and certain of our foreign subsidiaries (collectively, the “Guarantors�), and are secured by a first priority lien on substantially all of our domestic property, plant and equipment, the stock of all of our material domestic subsidiaries and certain foreign subsidiaries, and pledges of intercompany notes between certain of our subsidiaries.

Ìý

On April 25, 2017, we made an early prepayment of $100 million on our 2015 Extended Term Loan B from existing cash.

Ìý

A/R Programs

Ìý

Our U.S. accounts receivable securitization program (“U.S. A/R Program�) and our European accounts receivable securitization program (“EU A/R Program� and collectively with the U.S. A/R Program, “A/R Programs�) are structured so that we transfer certain of our trade receivables to the U.S. special purpose entity (“U.S. SPE�) and the European special purpose entity (“EU SPE�) in transactions intended to be true sales or true contributions. The receivables collateralize debt incurred by the U.S. SPE and the EU SPE. Information regarding our A/R Programs as of March 31, 2017 was as follows (monetary amounts in millions):

Ìý

Ìý

Ìý

Ìý

On April 21, 2017, we entered into amendments to our A/R Programs that, among other things, extend the scheduled termination dates to April 2020. As of March 31, 2017 and December 31, 2016, $460Ìýmillion and $437 million, respectively, of accounts receivable were pledged as collateral under our A/R Programs.

Ìý

Note Payable from ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International to ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ Corporation

Ìý

As of March 31, 2017, we had a loan of $811 million to our subsidiary, ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International (the “Intercompany Noteâ€�). The Intercompany Note is unsecured and $100 million of the outstanding amount is classified as current as of March 31, 2017 on our condensed consolidated balance sheets. As of March 31, 2017, under the terms of the Intercompany Note, ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International promises to pay us interest on the unpaid principal amount at a rate per annum based on the previous monthly average borrowing rate obtained under our U.S. A/R Program, less 10 basis points (provided that the rate shall not exceed an amount that is 25 basis points less than the monthly average borrowing rate obtained for the U.S. LIBOR-based borrowings under our Revolving Facility).

Ìý

COMPLIANCE WITH COVENANTS

Ìý

We believe that we are in compliance with the covenants contained in the agreements governing our material debt instruments, including our Senior Credit Facilities, our A/R Programs and our notes.

Ìý

Our material financing arrangements contain certain covenants with which we must comply. A failure to comply with a covenant could result in a default under a financing arrangement unless we obtained an appropriate waiver or forbearance (as to which we can provide no assurance). A default under these material financing arrangements generally allows debt holders the option to declare the underlying debt obligations immediately due and payable. Furthermore, certain of our material financing arrangements contain cross-default and cross-acceleration provisions under which a failure to comply with the covenants in one financing arrangement may result in an event of default under another financing arrangement.

Ìý

Our Senior Credit Facilities are subject to a single financial covenant (the “Leverage Covenantâ€�), which applies only to the Revolving Facility and is calculated at the ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International level. The Leverage Covenant is applicable only if borrowings, letters of credit or guarantees are outstanding under the Revolving Facility (cash collateralized letters of credit or guarantees are not deemed outstanding). The Leverage Covenant is a net senior secured leverage ratio covenant, which requires that ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International’s ratio of senior secured debt to EBITDA (as defined in the applicable agreement) is not more than 3.75 to 1.

Ìý

If in the future ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International fails to comply with the Leverage Covenant, then we may not have access to liquidity under our Revolving Facility. If ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International failed to comply with the Leverage Covenant at a time when we had uncollateralized loans or letters of credit outstanding under the Revolving Facility, ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International would be in default under the Senior Credit Facilities, and, unless ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International obtained a waiver or forbearance with respect to such default (as to which we can provide no assurance), ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International could be required to pay off the balance of the Senior Credit Facilities in full, and we may not have further access to such facilities.

Ìý

The agreements governing our A/R Programs also contain certain receivable performance metrics. Any material failure to meet the applicable A/R Programs� metrics in the future could lead to an early termination event under the A/R Programs, which could require us to cease our use of such facilities, prohibiting us from additional borrowings against our receivables or, at the discretion of the lenders, requiring that we repay the A/R Programs in full. An early termination event under the A/R Programs would also constitute an event of default under our Senior Credit Facilities, which could require us to pay off the balance of the Senior Credit Facilities in full and could result in the loss of our Senior Credit Facilities.