(5) Debt

Outstanding debt at September 30, 2024 and December 31, 2023 is summarized as follows:

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TripCo Exchangeable Senior Debentures due 2051

On March 25, 2021, TripCo issued $300 million aggregate original principal amount of the Debentures.  Pursuant to the terms of the offering, on March 31, 2021, the initial purchasers notified the Company of their intention to exercise the option to purchase $30 million aggregate original principal amount of additional Debentures. The additional Debentures were issued on April 5, 2021. Upon an exchange of Debentures, TripCo, at its option, may deliver shares of TRIP common stock or the value thereof in cash or a combination of shares of TRIP common stock and cash. Initially, 14.3299 shares of TRIP common stock are attributable to each $1,000 original principal amount of Debentures, representing an initial exchange price of approximately $69.78 for each share of TRIP common stock. A total of approximately 4.7 million shares of TRIP common stock are attributable to the Debentures. Interest is payable quarterly on March 31, June 30, September 30 and December 31 of each year, commencing June 30, 2021. The Debentures may be redeemed by TripCo, in whole or in part, on or after March 27, 2025. Holders of the Debentures also have the right to require TripCo to purchase their Debentures on March 27, 2025. Accordingly, the Debentures are classified as current debt in the condensed consolidated balance sheet as of September 30, 2024. The redemption and purchase price will generally equal 100% of the adjusted principal amount of the Debentures plus accrued and unpaid interest to the redemption date, plus any final period distribution.

TripCo Variable Prepaid Forward  

The VPF matures in November 2025. At maturity, the accreted loan amount due will be approximately $57 million.  As of September 30, 2024, 2.4 million shares of TRIP common stock, with a value of approximately $35 million, were pledged as collateral pursuant to the VPF contract.

Tripadvisor Credit Agreement

Tripadvisor is party to a credit agreement with a group of lenders, initially entered into in June 2015 and, amended and restated in June 2023, which, among other things, provides for a $500 million secured revolving credit facility (the

“Credit Facility”). The Credit Facility has a maturity date of June 29, 2028 (unless, on any date that is 91 days prior to the final scheduled maturity date in respect of any indebtedness outstanding under certain “specified debt,” the aggregate outstanding principal amount of such specified debt is $200 million or more then the maturity date will be such business day).  On July 8, 2024, Tripadvisor entered into the First Amendment to its Credit Agreement (the “Amended Credit Agreement”), which implements the Term Loan B Facility (discussed below) and, among other things:

The Amended Credit Agreement includes certain customary restrictions on the ability of Tripadvisor and its subsidiaries to, among other things, incur additional indebtedness, grant additional liens, and make investments, acquisitions, dispositions, distributions, and other payments, with certain exceptions as more specifically described in the Amended Credit Agreement.  The Amended Credit Agreement contains customary events of default and modifies the cross-default provision so that the Term Loan B Facility includes a customary cross-acceleration event of default with the Credit Facility under the Amended Credit Agreement.  If an event of default occurs and is continuing, then, among other things, the lenders under the Credit Facility and/or the Term Loan B Facility, as applicable, may declare any outstanding Credit Facility and/or Term Loan B Facility obligations, as applicable, under the Amended Credit Agreement to be immediately due and payable and exercise their rights and remedies against the collateral. The obligations under the Amended Credit Agreement are secured by substantially all assets, whether personal, tangible or intangible, of Tripadvisor and the Subsidiary Loan Parties as granted under the Security Documents. Any term not otherwise defined herein shall have the meaning ascribed to it in the Amended Credit Agreement.

Credit Facility

As of September 30, 2024 and December 31, 2023, Tripadvisor had no outstanding borrowings under the Credit Facility and had issued $3 million and $4 million, respectively, of undrawn standby letters of credit under the Credit Facility. Tripadvisor’s Credit Facility also includes $15 million of borrowing capacity available for letters of credit and $40 million for swing line borrowings on same-day notice. The Credit Facility, among other things, requires Tripadvisor to maintain a maximum total net leverage ratio of 4.5 to 1.0 solely in respect to the Credit Facility and contains certain customary affirmative and negative covenants and events of default, including a change of control.  

In connection with the Amended Credit Agreement, Tripadvisor incurred lender fees and other debt financing costs of $1 million under the Credit Facility. These costs were capitalized as deferred financing costs in other assets on the condensed consolidated balance sheet as of September 30, 2024. As of September 30, 2024, the Company had $4 million remaining in deferred financing costs in connection with the Credit Facility. These costs will be amortized over the remaining term of the Credit Facility, using the effective interest rate method, and recorded to interest expense on the condensed consolidated statement of operations.

Term Loan B Facility

On July 8, 2024, under the Amended Credit Agreement, Tripadvisor issued a $500 million Term Loan B Facility, maturing July 8, 2031, with an interest rate based on secured overnight financing rate plus 2.75%. On July 15, 2024, Tripadvisor used the funds to fully redeem its outstanding $500 million 2025 Senior Notes. As of September 30, 2024, the

interest rate on the Term Loan B Facility was 7.60% and the weighted-average interest rate on the Term Loan B Facility was 8.06% for the three months ended September 30, 2024. The Term Loan B Facility was offered at 99.75% of par and is required to be paid down at 1.00% of the aggregate principal amount per year, repayable in quarterly installments on the last day of each calendar quarter, commencing December 31, 2024, equal to 0.25% of the original principal amount with the balance due on the maturity date. The Term Loan B Facility has no financial covenants.

In connection with the issuance of the Term Loan B Facility, Tripadvisor incurred $7 million of debt issuance costs, comprised of the initial purchasers’ discount, lender fees, and other debt financing costs.  These debt issuance costs will be amortized over the remaining term of the Term Loan B Facility, using the effective interest rate method, and recorded to interest expense on the condensed consolidated statement of operations. As of September 30, 2024, unpaid interest on the Term Loan B Facility was not material and $10 million was recorded as interest expense on the condensed consolidated statements of operations during both the three and nine months ended September 30, 2024.

Capped Call Transactions

In connection with the issuance of the 0.25% convertible senior notes due 2026 (the “2026 Convertible Senior Notes”), Tripadvisor entered into privately negotiated capped call transactions (the “Capped Calls”) with certain of the initial purchasers of the 2026 Convertible Senior Notes and/or their respective affiliates and/or other financial institutions at a cost of approximately $35 million.

The Capped Calls are considered indexed to Tripadvisor’s own stock and are considered equity under GAAP. The Capped Calls are reported as a reduction to additional paid-in-capital and noncontrolling interest in equity of subsidiaries within stockholders’ equity as of September 30, 2024 and December 31, 2023.

Fair Value of Debt

As of September 30, 2024, Tripadvisor estimated the fair value of its Term Loan B Facility to be approximately $499 million and the fair value of its outstanding 2026 Convertible Senior Notes to be approximately $322 million. The estimated fair values of the Term Loan B Facility and the 2026 Convertible Senior Notes are based on recently reported market transactions and/or prices for identical or similar financial instruments obtained from a third-party pricing source, which Tripadvisor considers to be “Level 2” fair value measurements.