Live Nation Entertainment Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

LONG-TERM DEBT

LONG-TERM DEBT

6 Months Ended

Jun. 30, 2014

In May 2014, the Company issued $250 million of 5.375% senior notes due 2022 and $275 million of 2.5% convertible senior notes due 2019. Proceeds from these borrowings, net of related fees and expenses of $10.4 million, was $514.6 million. The Company intends to use the proceeds to redeem all of its outstanding 2.875% convertible senior notes plus accrued interest, if any, and for general corporate purposes.

Long-term debt, which includes capital leases, at June 30, 2014 and December 31, 2013, consisted of the following:



			June 30, 2014		December 31, 2013
			(in thousands)
Senior Secured Credit Facility:
	Term loan A, net of unamortized discount of $1.7 million and $2.0 million
		at June 30, 2014 and December 31, 2013, respectively	$	108,987	$	111,578
	Term loan B, net of unamortized discount of $13.3 million and
		$14.4 million at June 30, 2014 and December 31, 2013, respectively	929,587		933,226
	Revolving credit facility		—		—
7% Senior Notes due 2020, plus unamortized premium of $7.9 million
	and $8.6 million at June 30, 2014 and December 31, 2013, respectively		432,929		433,571
5.375% Senior Notes due 2022			250,000		—
2.875% Convertible Senior Notes due 2027, net of unamortized discount of
	$0.6 million and $7.6 million at June 30, 2014 and December 31, 2013, respectively		219,401		212,415
2.5% Convertible Senior Notes due 2019, net of unamortized discount of
	$21.6 million at June 30, 2014		253,401		—
Other long-term debt			114,168		118,097
			2,308,473		1,808,887
Less: current portion			269,628		278,403

Total long-term debt, net			$	2,038,845	$	1,530,484

Future maturities of long-term debt at June 30, 2014 are as follow:



	(in thousands)
2014	$	240,848
2015	48,174
2016	51,480
2017	49,027
2018	330,712
Thereafter	1,617,489
Total	2,337,730
Debt discount	(37,186		)
Debt premium	7,929
Total, including premium and discount	$	2,308,473

5.375% Senior Notes

In May 2014, the Company issued $250 million of 5.375% senior notes due 2022. Interest on the notes is payable semi-annually in cash in arrears on June 15 and December 15, beginning December 15, 2014, and the notes will mature on June 15, 2022. The Company may redeem some or all of the notes at any time prior to June 15, 2017 at a price equal to 100% of the principal amount, plus any accrued and unpaid interest to the date of redemption, plus a ‘make-whole’ premium. The Company may also redeem up to 35% of the aggregate principal amount of the notes from the proceeds of certain equity offerings prior to June 15, 2017, at a price equal to 105.375% of the principal amount, plus any accrued and unpaid interest. In addition, on or after June 15, 2017, the Company may redeem at its option some or all of the notes at redemption prices that start at 104.0313% of their principal amount, plus any accrued and unpaid interest to the date of redemption. The Company must make an offer to redeem the notes at 101% of the aggregate principal amount, plus any accrued and unpaid interest to the repurchase date, if it experiences certain defined changes of control.

2.5% Convertible Senior Notes

In May 2014, the Company issued $275 million of convertible senior notes due 2019. The notes pay interest semiannually in arrears on May 15 and November 15 at a rate of 2.5% per annum, beginning on November 15, 2014. The notes will mature on May 15, 2019, and may not be redeemed by the Company prior to the maturity date. The notes will be convertible, under certain circumstances, until November 15, 2018, and on or after such date without condition, at an initial conversion rate of 28.8363 shares of the Company’s common stock per $1,000 principal amount of notes, subject to adjustment, which represents a 52.5% conversion premium based on the last reported sale price for the Company’s common stock of $22.74 on May 19, 2014. Upon conversion, the notes may be settled in shares of common stock or, at the Company’s election, cash or a combination of cash and shares of common stock. Assuming the Company fully settled the notes in shares, the maximum number of shares that could be issued to satisfy the conversion is currently 7.9 million.

If the Company experiences a fundamental change, as defined in the indenture governing the notes, the holders of the 2.5% convertible senior notes may require the Company to purchase for cash all or a portion of their notes, subject to specified exceptions, at a price equal to 100% of the principal amount of the notes plus accrued and unpaid interest, if any.

As of June 30, 2014, the carrying amount of the equity component of the notes was $22.0 million and the principal amount of the liability component (face value of the notes) was $275 million. As of June 30, 2014, the remaining period over which the discount will be amortized is approximately 4.5 years and the value of the notes, if converted and fully settled in shares, did not exceed the principal amount of the notes. For the three and six months ended June 30, 2014, the effective interest rate on the liability component of the notes was 5.0%. The following table summarizes the amount of pre-tax interest cost recognized on the notes:



	Three and Six Months Ended June 30, 2014
	(in thousands)
Interest cost recognized relating to:
Contractual interest coupon	$	726
Amortization of debt discount	376
Amortization of debt issuance costs	118
Total interest cost recognized on the notes	$	1,220

2.875% Convertible Senior Notes

In late July 2014, pursuant to the Company’s option under the indenture governing the 2.875% convertible senior notes, the Company notified the holders of these notes that it intends to redeem all outstanding notes in late September at a redemption price of 100% of the principal amount of the notes, plus accrued and unpaid interest.