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

LONG-TERM DEBT LONG-TERM DEBT

3 Months Ended

Mar. 31, 2018

In March 2018, the Company issued $300 million principal amount of 5.625% senior notes due 2026, issued $550 million principal amount of 2.5% convertible senior notes due 2023 and amended its senior secured credit facility reducing the applicable interest rate for the term loan B. Total gross proceeds of $850.0 million from the issuance of these borrowings were used to repay $223.3 million of the outstanding principal amount of the Company’s 2.5% convertible senior notes due 2019 and to pay the related repurchase premium of $81.9 million on the 2.5% convertible senior notes due 2019 and accrued interest and fees of $20.9 million, leaving $523.9 million in additional cash available to repurchase the remaining outstanding principal of its 2.5% convertible senior notes due 2019 and for general corporate purposes. The Company recorded a $2.9 million loss on extinguishment of debt related to this refinancing.

Long-term debt, which includes capital leases, at March 31, 2018 and December 31, 2017, consists of the following:



	March 31, 2018			December 31, 2017
	(in thousands)
Senior Secured Credit Facility:
Term loan A	$	171,000		$	175,750
Term loan B	960,424			962,849
4.875% Senior Notes due 2024	575,000			575,000
5.625% Senior Notes due 2026	300,000			—
5.375% Senior Notes due 2022	250,000			250,000
2.5% Convertible Senior Notes due 2023	550,000			—
2.5% Convertible Senior Notes due 2019	51,684			275,000
Other long-term debt	120,483			99,393
Total principal amount	2,978,591			2,337,992
Less unamortized discounts and debt issuance costs	(111,778		)	(38,033		)
Total debt, net of unamortized discounts and debt issuance costs	2,866,813			2,299,959
Less: current portion	119,414			347,593
Total long-term debt, net of unamortized discounts and debt issuance costs	$	2,747,399		$	1,952,366

Future maturities of long-term debt at March 31, 2018 are as follows:



	(in thousands)
April 1 - December 31, 2018	$	118,652
2019	41,261
2020	72,281
2021	122,917
2022	819,189
Thereafter	1,804,291
Total	$	2,978,591

All long-term debt without a stated maturity date is considered current and is reflected as maturing in the earliest period shown in the table above. See Note 4—Fair Value Measurements for discussion of fair value measurement of the Company’s long-term debt.

5.625% Senior Notes

In March 2018, the Company issued $300 million principal amount of 5.625% senior notes due 2026. Interest on the notes is payable semiannually in cash in arrears on March 15 and September 15, beginning September 15, 2018, and the notes will mature on March 15, 2026. The Company may redeem some or all of the notes at any time prior to March 15, 2021 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 redeem up to 35% of the aggregate principal amount of the notes from proceeds of certain equity offerings prior to March 15, 2021, at a price equal to 105.625% of the aggregate principal amount being redeemed, plus accrued and unpaid interest thereon, if any, to the date of redemption. In addition, on or after March 15, 2021, the Company may redeem some or all of the notes at any time at redemption prices that start at 104.219% 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 their aggregate principal amount, plus accrued and unpaid interest to the repurchase date, if it experiences certain defined changes of control.

2.5% Convertible Senior Notes Due 2023

In March 2018, the Company issued $550 million principal amount of 2.5% convertible senior notes due 2023. The notes pay interest semiannually in arrears on March 15 and September 15, beginning September 15, 2018, at a rate of 2.5% per annum. The notes will mature on March 15, 2023, and may not be redeemed by the Company prior to the maturity date. The notes will be convertible, under certain circumstances, until December 15, 2022, and on or after such date without condition, at an initial conversion rate of 14.7005 shares of the Company’s common stock per $1,000 principal amount of notes, subject to adjustment, which represents a 54.4% conversion premium based on the last reported sale price for the Company’s common stock of $44.05 on March 19, 2018. 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 8.1 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 due 2023 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 $64.0 million, which is treated as a debt discount, and the principal amount of the liability component (face value of the notes) is $550 million. As of March 31, 2018, the remaining period for the debt discount was approximately 5 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 March 31, 2018, the effective interest rate on the liability component of the notes was 5.7%. The following table summarizes the amount of pre-tax interest cost recognized on the notes:



	Three Months Ended March 31, 2018
	(in thousands)
Interest cost recognized relating to:
Contractual interest coupon	$	458
Amortization of debt discount	—
Amortization of debt issuance costs	—
Total interest cost recognized on the notes	$	458

2.5% Convertible Senior Notes Due 2019

As noted above, in March 2018, the Company retired $223.3 million of the outstanding principal amount of its 2.5% convertible senior notes due 2019 for $305.2 million plus fees and accrued interest in private repurchase transactions. The fair value of the equity component of the notes prior to repurchase was calculated assuming a 4.87% non-convertible borrowing rate resulting in $83.4 million of the total repurchase price being recorded to additional paid-in capital. The Company expects to repurchase the remaining outstanding principal amount of the notes in the near future.