Loss on Extinguishment of Debt, net
A loss on the extinguishment of debt, net of $2.3 million was recognized for the year ended December 31, 2015, primarily due to the prepayment and termination of project level indebtedness related to several power plants and repurchase of the Senior Notes. There were no extinguishments of debt during the year ended December 31, 2014.
Interest Expense, net
Interest expense, net was $107.6 million and $24.3 million for the years ended December 31, 2015 and 2014, respectively, an increase of $83.4 million. The increase was primarily due to interest and amortization of deferred financing costs under our bridge facility, which was drawn in December 2014 and outstanding through the second quarter of 2015, and the Senior Notes issued during the third quarter of 2015.
Loss (gain) on Foreign Currency Exchange
Net loss on foreign currency exchange was $35.7 million for the year ended December 31, 2015, versus a gain of $4.0 million for the year ended December 31, 2014, a change of $39.8 million. This net loss is primarily due to hedging activities initiated as of the IPO.
During the year ended December 31, 2015, the Company realized a net loss of $33.1 million on foreign currency forward contracts that matured during that year resulting from the devaluation of the Brazilian real, Chinese yuan renminbi, Indian rupee, Malaysian ringgit, South African rand and Thai baht as compared to the U.S. dollar. This $33.1 million net loss was attributed to (i) a net gain of $27.7 million on forward contracts associated with current period cash flows; and (ii) a net loss of $60.8 million on forward contracts that hedge the purchase of foreign currencies for investments in acquisitions and debt extinguishment.
Other Income, net
Other income, net was not material for the years ended December 31, 2015 or 2014.
Income Tax Expense
The income tax expense was $5.3 million and $1.7 million for the years ended December 31, 2015 and December 31, 2014, respectively. For the year ended December 31, 2015, the overall effective tax rate was different than the statutory rate of 35.0% primarily due to the recording of a valuation allowance on certain tax benefits attributed to the Company; the benefit in 2014 differed from the statutory rate of 35.0% primarily due to lower statutory income tax rates in our foreign jurisdictions. Income tax expense results from profitable operations in certain foreign jurisdictions which were not offset by losses in other jurisdictions due to tax regulations.
Liquidity and Capital Resources
The Company’s principal liquidity requirements are to finance current operations, service debt and, if and when declared by the Company, to fund cash dividends to investors. We will also use capital in the future to finance expansion capital expenditures and acquisitions. As a normal part of the Company’s business, we have in the past and may from time to time seek to repurchase our outstanding securities through tender offers, open market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual and legal restrictions and other factors. Changes in operating plans, lower than anticipated electricity sales, increased expenses, acquisitions or other events may cause management to seek additional debt or equity financing in future periods. We are a newly independent company, and there can be no guarantee that financing will be available on acceptable terms or at all. Debt financing, if available, could impose additional cash payment obligations and additional covenants and operating restrictions. Equity financing, if any, could result in the dilution of existing stockholders and make it more difficult to maintain our dividend policy.