September 30, 2020 and 2019, respectively, and $8.9 million and
$8.0 million for the nine months ended September 30, 2020 and 2019,
respectively.
Exchange agreement
In the three and nine months ended September 30, 2020 and 2019, the
Company exchanged certain used network equipment and cash
consideration for new network equipment. The fair value of the
equipment received was estimated to be $0.2 million and $0.3
million for the three months ended September 30, 2020 and 2019,
respectively, and $1.1 million and $2.6 million for the nine months
ended September 30, 2020 and 2019, respectively. After considering
the cash component the transactions resulted in gains of $0.1
million and $0.1 million for
the three months ended September 30, 2020 and 2019, respectively,
and $0.3 million and $0.8 million for the nine months
ended September 30, 2020 and 2019, respectively. The estimated fair
value of the equipment received was based upon the cash
consideration price the Company pays for the new network equipment
on a standalone basis (Level 3).
Installment payment agreement
In March 2015, the Company
entered into an installment payment agreement (“IPA”) with a
vendor. Under the IPA the Company was allowed to purchase network
equipment in exchange for interest free note obligations each with
a twenty-four month term
until July 2020 when additional borrowings under the IPA expired.
There are no payments under each note obligation for the
first six months followed by eighteen equal installment payments
for the remaining eighteen month term. As of September 30, 2020,
and December 31, 2019 there was $10.4 million and $12.5
million, respectively, of note
obligations outstanding under the IPA, secured by the related
equipment. The Company recorded the assets purchased and the net
present value of the note obligation utilizing an imputed interest
rate. The resulting discount was $0.3 million and $0.4
million as of September 30, 2020 and December 31, 2019,
respectively, and is being amortized over the note term using the
effective interest rate method.
3. Long-term debt:
The Company has $445.0 million
of senior secured notes (the "2022 Notes") and €350.0
million ($410.4 million USD as
of September 30, 2020) of senior unsecured notes (the "2024 Notes")
outstanding. The 2022 Notes are due on March 1, 2022 and bear
interest at a rate of 5.375% per year. Interest on the 2022
Notes is paid semi-annually on March 1 and September 1. The 2024
Notes are due on June 30, 2024 and bear interest at a rate of
4.375% per year. Interest on the 2024 Notes is paid semi-annually
on June 30 and December 30.
2024 Notes issuances
In June 2020, Group completed an offering of €215.0 million
aggregate principal amount of 4.375% senior unsecured notes. The
net proceeds from the June 2020 offering, after deducting offering
expenses, were $240.3 million. In June 2019, Group completed an
offering of €135.0 million aggregate principal amount of 4.375%
senior unsecured notes. The net proceeds from the June 2019
offering, after deducting offering expenses, were $152.1 million.
The Company expects to use the proceeds from these offerings for
general corporate purposes, to repay debt obligations, to
repurchase the Company’s common stock or for special or recurring
dividends to the Company’s stockholders.
The 2024 Notes bear interest at a rate of 4.375% per annum.
Interest began to accrue on the 2024 Notes issued in June 2020, on
June 4, 2020 and interest began to accrue on the 2024 Notes issued
in June 2019 on June 25, 2019. Interest is paid semi-annually in
arrears on June 30 and December 30 of each year. Unless earlier
redeemed, the 2024 Notes will mature on June 30, 2024. The June
2020 issuance of €215.0 million 2024 Notes were issued at a
discount of 99.5% for €213.9 million Euros ($240.0 million USD) on
June 3, 2020 at a Euro to USD rate of $1.112. The discount is
amortized to interest expense to the maturity date under the
effective interest rate method. The Company received proceeds in
USD on the June 2020 2024 Notes on June 9, 2020 at a Euro to USD
rate of $1.133 resulting in a realized gain on foreign exchange of
$2.5 million. The June 2019 issuance of 2024 Notes were issued at
par for €135.0 million on June
25, 2019. The issuances of the 2024 Notes were in Euros and are
reported in the Company’s reporting currency – US Dollars. As of
September 30, 2020 the carrying value of our 2024 Notes was
$410.4 million. The unrealized
(loss) gain on foreign exchange on the Company’s 2024 Notes from
converting the 2024 Notes into USD was $(17.3) million for
the three months ended September 30, 2020 and $6.2 million for the
three months ended September 30, 2019 and was $(17.8) million for
the nine months ended September 30, 2020 and was $6.3 million for
the nine months ended September 30, 2019.