Quarterly report pursuant to Section 13 or 15(d)

Long Term Debt Activity

v3.20.1
Long Term Debt Activity
3 Months Ended
Mar. 31, 2020
Debt Disclosure [Abstract]  
Long Term Debt Activity

7.

Long Term Debt Activity

Senior Secured Credit Facility

Cinemark USA, Inc. has a senior secured credit facility that includes a $700,000 term loan and a $100,000 revolving credit line (the “Credit Agreement”).  On March 25, 2020, the Company borrowed $98,800 under the revolving credit line of the Credit Agreement.  

As of March 31, 2020, there was $644,678 outstanding under the term loan and $98,800 outstanding under the revolving credit line.   As of March 31, 2020, approximately $71 was available for borrowing after giving effect to a letter of credit outstanding.  On April 3, 2020, the letter of credit was cancelled and was no longer outstanding.   Quarterly principal payments of $1,649 are due on the term loan through December 31, 2024, with a final principal payment of $613,351 due on March 29, 2025.  The revolving credit line matures November 28, 2022.

The average interest rate on outstanding term loan borrowings under the Credit Agreement at March 31, 2020 was approximately 3.5% per annum, after giving effect to the interest rate swap agreements discussed below.  The average interest rate on the outstanding revolver borrowings was 2.9% at March 31, 2020.

Interest Rate Swap Agreements

During the three months ended March 31, 2020, the Company amended and extended its three existing interest rate swap agreements and entered into a new interest rate swap agreement, all of which are used to hedge a portion of the interest rate risk associated with the variable interest rates on the Company’s term loan debt and qualify for cash flow hedge accounting. Below is a summary of the Company’s interest rate swap agreements designated as cash flow hedges as of March 31, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Estimated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value at

 

Notional

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

Amount

 

 

Effective Date

 

Pay Rate

 

 

Receive Rate

 

Expiration Date

 

2020 (1)

 

$

137,500

 

 

December 31, 2018

 

2.12%

 

 

1-Month LIBOR

 

December 31, 2024

 

$

11,332

 

$

175,000

 

 

December 31, 2018

 

2.12%

 

 

1-Month LIBOR

 

December 31, 2024

 

 

14,447

 

$

137,500

 

 

December 31, 2018

 

2.19%

 

 

1-Month LIBOR

 

December 31, 2024

 

 

11,800

 

$

150,000

 

 

March 31, 2020

 

0.57%

 

 

1-Month LIBOR

 

March 31, 2022

 

 

881

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

38,460

 

 

(1)

Approximately $8,949 of the total is included in accounts payable and accrued expenses and $29,511 is included in other long-term liabilities on the condensed consolidated balance sheet as of March 31, 2020.

  Upon amending the interest rate swap agreements, the Company determined that the interest payments hedged with the agreements are still probable to occur, therefore the loss that accumulated on the swaps prior to the amendments of $29,359 will be amortized on a straight-line basis to interest expense through December 31, 2022, the original maturity dates of the swaps.   The fair values of the amended interest rate swaps and the new interest rate swap are recorded on the Company’s condensed consolidated balance sheet as an asset or liability with the related gains or losses reported as a component of accumulated other comprehensive loss.  The changes in fair value are reclassified from accumulated other comprehensive loss into earnings in the same period that the hedged items affect earnings. The valuation technique used to determine fair value is the income approach.  Under this approach, the Company uses projected future interest rates, which fall in Level 2 of the U.S. GAAP hierarchy as defined by FASB ASC Topic 820-10-35, as provided by counterparties to the interest rate swap agreements and the fixed rates that the Company is obligated to pay under the agreements.

Fair Value of Long-Term Debt

The Company estimates the fair value of its long-term debt using the market approach, which utilizes quoted market prices that fall under Level 2 of the U.S. GAAP fair value hierarchy as defined by ASC 820, Fair Value Measurement (“ASC Topic 820”). The carrying value of the Company’s long-term debt was $1,898,478 and $1,801,327 as of March 31, 2020 and December 31, 2019, respectively, excluding unamortized debt discounts and debt issue costs. The fair value of the Company’s long-term debt was $1,490,842 and $1,826,503 as of March 31, 2020 and December 31, 2019, respectively.