3 unchanged sentences
We use interest rate derivative instruments to manage exposure to interest rate changes.
−Removed: As of December 31, 2019 and December 31, 2018, if market rates on our outstanding borrowings under the BAML Revolver and the floating rate portion of the JPM Term Loan increased by 10% at maturity, or approximately 31 and 38 basis points, respectively, over the current variable rate, the increase in interest expense would decrease future earnings and cash flows by $0.2 million and $0.7 million annually, respectively.
+Added: As of December 31, 2020 and December 31, 2019, if market rates on our outstanding borrowings under the BAML Revolver and the floating rate portion of the JPM Term Loan increased by 10% at maturity, or approximately 13 and 31 basis points, respectively, over the current variable rate, the increase in interest expense would decrease future earnings and cash flows by approximately $5,000 and $153,000 annually, respectively.
Based upon our credit rating, the interest rate on the BAML Revolver as of December 31, 2020 was LIBOR plus 120 basis points, or 1.34% per annum.
−Removed: Based upon our credit rating, the interest rate on the $50 million portion of the JPM Term Loan that is not subject to interest rate swap transactions as of December 31, 2019 was the LIBOR-based rate plus 125 basis points, or 3.06% per annum.
−Removed: We do not believe that the interest rate risk on the BAML Revolver and the JPM Term Loan is material as of December 31, 2019.
−Removed: Although the interest rates on the BMO Term Loan, the BAML Term Loan and the JPM Term Loan are variable, the Company fixed the base LIBOR interest rates on the BMO Term Loan and the BAML Term Loan, and the LIBOR-based rate on a $100 million portion of the JPM Term Loan, by entering into interest rate swap agreements.
+Added: On December 24, 2020, we repaid the $50 million portion of the JPM Term Loan that was at a floating rate.
+Added: Based upon our credit rating, the interest rate on the $50 million portion of the JPM Term Loan that was not subject to interest rate swap transactions as of December 31, 2019 was the LIBOR-based rate plus 125 basis points, or 2.96% per annum.
+Added: We do not believe that the interest rate risk on the BAML Revolver is material as of December 31, 2020.
+Added: Although the interest rates on the BMO Term Loan, the BAML Term Loan and the JPM Term Loan are variable, the Company fixed the base LIBOR interest rates on the BMO Term Loan and the BAML Term Loan, and the LIBOR-based rate on the remaining $100 million portion of the JPM Term Loan, by entering into interest rate swap agreements.
On July 22, 2016, the Company fixed the interest rate for the period beginning on September 27, 2017 and ending on September 27, 2021 on the BAML Term Loan with multiple interest rate swap agreements (the “2017 Interest Rate Swap”).
−Removed: On August 26, 2013, the Company fixed the interest rate until August 26, 2020 on the BMO Term Loan with an interest rate swap agreement (the “2013 BMO Interest Rate Swap”).
On March 7, 2019, the Company fixed the interest rate for the period beginning on March 29, 2019 and ending on November 30, 2021 for the notional value of $100 million on the JPM Term Loan with interest rate swap agreements (the “2019 JPM Interest Rate Swap”).
3 unchanged sentences
We believe that we have mitigated interest rate risk with respect to the BAML Term Loan through the 2017 Interest Rate Swap from September 27, 2017 until September 27, 2021.
−Removed: We believe that we have mitigated interest rate risk with respect to the BMO Term Loan through the 2013 BMO Interest Rate Swap and the 2019 BMO Interest Rate Swap until January 31, 2024.
−Removed: We believe that we have mitigated the interest rate risk on a $100 million portion of the JPM Term Loan until November 30, 2021 with the 2019 JPM Interest Rate Swap.
+Added: We believe that we have mitigated interest rate risk with respect to the BMO Term Loan through the 2019 BMO Interest Rate Swap until January 31, 2024.
+Added: We believe that we have mitigated the interest rate risk on the remaining $100 million portion of the JPM Term Loan until November 30, 2021 with the 2019 JPM Interest Rate Swap.
These interest rate swaps were our only derivative instruments as of December 31, 2020.
The table below lists our derivative instruments, which are hedging variable cash flows related to interest on our BAML Term Loan, BMO Term Loan and a portion of the JPM Term Loan as of December 31, 2020 (in thousands):
+Added: Fair Value (2) at December 31,
(in thousands)
2017 Interest Rate Swap
−Removed: 2013 BMO Interest Rate Swap
2019 JPM Interest Rate Swap
2019 BMO Interest Rate Swap (1)
+Added: 2013 BMO Interest Rate Swap
(1) The Notional Value will decrease to $165 million on November 30, 2021.
−Removed: Our BMO Term Loan, BAML Term Loan and JPM Term Loan hedging transactions used derivative instruments that involve certain additional risks such as counterparty credit risk, the enforceability of hedging contracts and the risk that unanticipated and significant changes in interest rates will cause a significant loss of basis in either or both of the contracts.
+Added: (2) Classified within Level 2 of the fair value hierarchy.
+Added: Our BMO Term Loan, BAML Term Loan and JPM Term Loan hedging transactions used derivative instruments that involve certain additional risks such as counterparty credit risk, the enforceability of hedging contracts and the risk that unanticipated and significant changes in interest rates will cause a significant loss of basis in either or
+Added: both of the contracts.
We require our derivatives contracts to be with counterparties that have investment grade ratings.
2 unchanged sentences
The Company’s derivatives are recorded at fair value in other assets and liabilities in the consolidated balance sheets, the effective portion of the derivatives’ fair value is recorded to other comprehensive income in the consolidated statements of other comprehensive income (loss) and prior to January 1, 2019, the ineffective portion of the derivatives’ fair value was recognized directly into earnings as Other in the consolidated statements of income.
−Removed: The interest rate swaps effectively fix the interest rate on the BAML Term Loan and BMO Term Loan;
−Removed: however, prior to October 18, 2017, there was no floor on the variable interest rate of the swap whereas the BAML Term Loan and BMO Term Loan were subject to a zero percent floor.
−Removed: As a result there was a mismatch and the ineffective portion of the derivatives’ changes in fair value were recognized directly into earnings.
−Removed: On October 18, 2017, the Company amended the BMO Term Loan and BAML Term Loan to, among other changes, provide that the deemed zero percent interest rate floor is not applicable to any loan where there is a corresponding interest rate swap contract in place.
−Removed: During the nine months ended September 30, 2017, the Company recorded a $0.2 million charge from hedge ineffectiveness in earnings, which is included in other in the consolidated statements of income.
−Removed: After giving effect to the October 18, 2017 amendments to the BAML Term Loan and the BMO Term Loan, the Company recorded a $2.1 million expense to reverse the impact of hedge ineffectiveness previously recorded, which had been included in “other” in our consolidated statements of income.
The following table presents, as of December 31, 2020, our contractual variable rate borrowings under our BAML Revolver, which matures on January 12, 2022, under our JPM Term Loan, which matures on November 30, 2021, under our BAML Term Loan, which matures on January 12, 2023, under our BMO Term Loan Tranche A, which matures on November 30, 2021, under our BMO Term Loan Tranche B, which matures on January 31, 2024, under our Series A Notes, which mature on December 20, 2024, and under our Series B Notes, which mature on December 20, 2027.
−Removed: Under the BAML Revolver, we have the right to extend the initial maturity date with two additional six month extensions, or until January 12, 2023, upon payment of a fee and satisfaction of certain customary conditions.
+Added: Under the BAML Revolver and the JPM Term Loan, we have the right to extend the initial maturity date with two additional six month extensions, or until January 12, 2023 and November 30, 2022, respectively, upon payment of a fee and satisfaction of certain customary conditions.
Payment due by period
8 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.