First Data 2007 Annual Report Download - page 68

FIRST DATA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
The notes accrue interest at the rate of 9.875% per annum and mature on September 24, 2015. Interest on the notes is payable on March 31 and
September 30 of each year, commencing on March 31, 2008.
The Company may redeem the notes, in whole or in part, at any time prior to September 30, 2011 at a price equal to 100% of the principal amount of
the notes redeemed plus accrued and unpaid interest to the redemption date and a "make-whole premium" as defined. Thereafter, the Company may redeem
the notes, in whole or in part, at established redemption prices. In addition, on or prior to September 30, 2010, the Company may redeem up to 35% of the
notes with the net cash proceeds from certain equity offerings at established redemption prices.
The terms of the senior notes require the Company to file a registration statement with the United States Securities and Exchange Commission (the
"SEC") relating to an offer to exchange the notes and guarantees for publicly tradable notes and guarantees having substantially identical terms within 360
days of the original issue date of the notes. Additionally, the Company is required to use its reasonable best efforts to keep effective the shelf registration
statement until the earliest of (i) two years after the original issue date of the notes, (ii) such time as all of the notes have been sold or (iii) the date upon which
all notes covered by such shelf registration statement become eligible for resale. If a registration statement is not filed and effective or is not maintained
effective as noted above, then additional interest will accrue on the principal amount of the notes at a rate of 0.25% per annum increasing an additional
0.25% per annum after a 90-day period not to exceed 0.5% per annum. Once the registration is effective in accordance with the above requirements such
additional interest will cease to accrue. At this time no additional interest has accrued or is expected to be accrued.
Senior Unsecured Cash-pay Term Loan Facility and Senior Unsecured PIK Term Loan Facility
The Company entered into a $3.8 billion senior unsecured cash-pay term loan facility and a $2.8 billion senior unsecured PIK term loan facility with
terms of eight years ("senior unsecured term loan facilities"). Interest for the first six-month period is payable at a rate equal to LIBOR plus 3.5% for the cash-
pay term loan facility and LIBOR plus 4.5% for the PIK term loan facility. The margins, subject to caps noted below, will increase by an additional 0.50% at
the beginning of each three-month period thereafter until September 24, 2008. At that time, margins, subject to caps noted below, will increase by 0.25% at
the beginning of each three-month period thereafter for so long as the loans are outstanding. For so long as the Company is not in default, the maximum
interest rates the Company may pay related to these facilities are 9.875% for the senior unsecured cash-pay term loan facility and 10.55% for the senior
unsecured PIK term loan facility. The increase in interest rates is related to these facilities being bridge facilities and, as discussed above, the Company
expects to refinance the borrowings under the bridge facilities. As noted above and in October 2007, $2.2 billion of the senior unsecured cash-pay term loan
facility was repaid upon issuance of 9.875% senior unsecured cash-pay notes due 2015.
Interest on the senior unsecured PIK term loan up to and including September 30, 2011 will be paid entirely by increasing the principal amount of the
outstanding loan or by issuing senior unsecured PIK debt. Beginning October 1, 2011, such interest will be payable in cash.
If any borrowings under the senior unsecured term loan facilities remain outstanding on the one-year anniversary of the closing of the senior unsecured
credit facilities, the lenders will have the option to exchange the initial loans for senior cash-pay notes or senior PIK notes with a term of seven years.
The senior unsecured term loan facilities contain certain mandatory redemption requirements, such as "excess cash flow" as defined, in certain
circumstances. Voluntary repayments are allowed and are subject to certain costs.
Senior Subordinated Unsecured Term Loan Facility
The Company entered into a senior subordinated unsecured term loan facility providing senior subordinated unsecured financing of $2.5 billion
consisting of a $2.5 billion senior subordinated unsecured term loan facility with a term of nine years. Interest for the first six-month period is payable at a rate
equal to LIBOR plus 4.75%. The margin, subject to caps noted below, will increase by an additional 0.50% at the beginning of each three-month period
thereafter until September 24, 2008. At that time, the margin, subject to caps noted below, will increase by 0.25% at the beginning of each three-month period
thereafter for so long as the loan is outstanding. For so long as the Company is not in default, the maximum interest rate the Company may pay related to this
facility is 11.250%. The increase in interest rates is related to this facility being a bridge facility and the Company expects to refinance the borrowings under
the bridge facility.
If any borrowings under the senior subordinated unsecured term loan facility remain outstanding on the one-year anniversary of the closing of the senior
subordinated unsecured term loan facility, the lenders will have the option to exchange the initial subordinated loan for senior subordinated notes with a term
of eight years that the Company will issue under a senior subordinated indenture.
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