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

9 Months Ended

Sep. 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 and paid related fees and expenses of $9.9 million. In July 2014, the holders of $29.3 million of aggregate outstanding principal of the 2.875% convertible senior notes exercised their right to redeem their notes for cash and in late September 2014, pursuant to the Company’s option under the indenture governing the notes, the Company redeemed the remainder of these notes using the net proceeds noted above. In addition to redeeming the $220 million principal amount of these notes, the Company paid total accrued interest of $1.1 million and related fees and expenses of $0.2 million for the redemption, leaving $293.8 million in additional cash available for general corporate purposes. The loss on extinguishment of debt related to the redemption of the 2.875% convertible senior notes was not significant.

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



			September 30, 2014		December 31, 2013
			(in thousands)
Senior Secured Credit Facility:
	Term loan A, net of unamortized discount of $1.6 million and $2.0 million
		at September 30, 2014 and December 31, 2013, respectively	$	106,254	$	111,578
	Term loan B, net of unamortized discount of $12.7 million and
		$14.4 million at September 30, 2014 and December 31, 2013, respectively	927,775		933,226
	Revolving credit facility		—		—
7% Senior Notes due 2020, plus unamortized premium of $7.6 million
	and $8.6 million at September 30, 2014 and December 31, 2013, respectively		432,607		433,571
5.375% Senior Notes due 2022			250,000		—
2.875% Convertible Senior Notes due 2027, net of unamortized discount of
	$7.6 million at December 31, 2013		—		212,415
2.5% Convertible Senior Notes due 2019, net of unamortized discount of
	$20.5 million at September 30, 2014		254,490		—
Other long-term debt			104,030		118,097
			2,075,156		1,808,887
Less: current portion			47,947		278,403

Total long-term debt, net			$	2,027,209	$	1,530,484

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



	(in thousands)
2014	$	11,330
2015	46,312
2016	50,187
2017	48,886
2018	330,567
Thereafter	1,615,060
Total	2,102,342
Debt discount	(34,793		)
Debt premium	7,607
Total, including premium and discount	$	2,075,156

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 settles 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.

The carrying amount of the equity component of the notes is $22.0 million and the principal amount of the liability component (face value of the notes) is $275 million. As of September 30, 2014, the remaining amortization period for the debt discount was approximately 4.3 years and the value of the notes, if converted and fully settled in shares, did not exceed the principal amount of the notes. As of September 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 Months Ended September 30, 2014		Nine Months Ended September 30, 2014
	(in thousands)
Interest cost recognized relating to:
Contractual interest coupon	$	1,719	$	2,444
Amortization of debt discount	1,089		1,465
Amortization of debt issuance costs	334		453
Total interest cost recognized on the notes	$	3,142	$	4,362