Quarterly report pursuant to Section 13 or 15(d)

Debt

v3.20.2
Debt
6 Months Ended
Jun. 30, 2020
Debt Disclosure [Abstract]  
Debt Debt
 
Debt consists of the following ($ in millions):
 
June 30, 2020
 
December 31, 2019
$1,000 million 4.75% Senior Notes, due May 15, 2022
$
1,005

 
$
1,004

$1,000 million 6.125% Senior Notes, due February 15, 2024

 
1,000

$2,200 million 4.75% Senior Notes, due January 15, 2025
2,234

 
2,228

$1,200 million 5.250% Senior Notes due April 1, 2025
1,248

 

$1,800 million 5.375% Senior Notes, due June 1, 2026
1,800

 
1,800

$750 million 5.375% Senior Notes due August 15, 2026
798

 

$2,500 million 4.25% Senior Notes due December 15, 2027
2,481

 
2,479

$3,500 million 4.625% Senior Notes due December 15, 2029
3,500

 
3,500

$2,000 million 3.375% Senior Notes due February 15, 2030
2,000

 

Fair value of interest rate swap agreements

 
(1
)
Total senior notes
15,066

 
12,010

Term loan credit facility
1,450

 
1,450

Revolving credit agreement
89

 
93

Mortgage notes payable
52

 
54

Construction loan payable
165

 
140

Finance leases and other
139

 
122

Debt issuance costs
(147
)
 
(143
)
Total debt
16,814

 
13,726

Less current portion
(106
)
 
(88
)
 Long-term debt
$
16,708

 
$
13,638



Senior Notes

In connection with the WellCare Acquisition, in January 2020, the Company completed an exchange offer for up to $1,200 million of 5.25% Senior Notes due April 1, 2025 and $750 million of 5.375% Senior Notes due August 15, 2026 (collectively, the WellCare Notes) issued by WellCare and issued $1,146 million aggregate principal amount of 5.25% Senior Notes due April 1, 2025 and $747 million aggregate principal amount of 5.375% Senior Notes due August 15, 2026. Additionally, the Company’s wholly owned subsidiary, WellCare Health Plans, Inc., assumed the remaining unexchanged WellCare Notes. The WellCare Notes were recorded at the acquisition date fair value of $2,055 million.

In February 2020, the Company issued $2,000 million 3.375% Senior Notes due February 15, 2030 (the 2030 Notes). The Company used the net proceeds from the 2030 Notes to redeem all of its outstanding $1,000 million 6.125% Senior Notes, due February 15, 2024 (the 2024 Notes). The Company recognized a pre-tax loss on extinguishment of approximately $44 million, including the call premium, the write-off of unamortized debt issuance costs and the loss on the termination of the $1,000 million interest rate swap associated with the 2024 Notes. The Company also intended to use remaining proceeds to redeem its $1,000 million 4.75% Senior Notes due May 15, 2022 (the 2022 Notes). However, as a result of the spread of COVID-19 and the resulting disruption and volatility in the global capital markets, the Company has deferred the redemption of the 2022 Notes at this time. 

In May 2020, the Company completed an exchange offer, whereby it exchanged substantially all of the outstanding $2,000 million 3.375% Senior Notes due February 15, 2030, $1,000 million 4.75% Senior Notes due January 15, 2025, $2,500 million 4.25% Senior Notes due December 15, 2027, and $3,500 million 4.625% Senior Notes due December 15, 2029 for identical securities that have been registered under the Securities Act of 1933.

Interest Rate Swaps

In February 2020, the Company terminated the interest rate swap agreements associated with the 2022 Notes and $2,200 million 4.75% Senior Notes, due January 15, 2025, (the 2025 Notes). The interest rate swaps associated with the 2024 Notes were also terminated in connection with the redemption of those notes as discussed above. In total, the Company terminated three interest rate swap contracts with a notional amount of $2,100 million. The swaps effectively converted $2,100 million of fixed rate notes to floating rates. As a result of the interest rate swap terminations, the Company received $9 million in cash. The corresponding
net gain on the 2022 Notes and 2025 Notes is being amortized as a reduction to interest expense over the remaining term of the respective notes.