McDermott International is an engineering and construction company with significant oil and gas operations. The annual report for McDermott contains the following note:

The company used cash on hand to purchase the entire $200 million in aggregate principal amount of its Secured Notes outstanding for approximately $249.0 million, including accrued interest of approximately $10.9 million. As a result of this early retirement of debt, we recognized $49.0 million of expense during the year ended December 31.

Required:

1. In your own words, explain the meaning of this note.

2. Why did management incur an expense on the early retirement of this debt?