Go Daddy 2015 Annual Report Download - page 108

Table of Contents
GoDaddy Inc.
Notes to Consolidated Financial Statements
(In millions, except share amounts which are reflected in thousands and per share amounts)
Term Loan and Revolving Credit Loan
We originally entered into our secured credit agreement (the Credit Facility) on December 16, 2011 , consisting of a $750.0 million original balance term
loan maturing on December 16, 2018 (the Term Loan) and an available $75.0 million revolving credit loan maturing on December 16, 2016 (the Revolving
Credit Loan). The Term Loan was issued at a 5% discount on the face of the note at the time of original issuance for net proceeds totaling $712.5 million . We
refinanced the Term Loan on multiple occasions lowering our effective interest rate. Additionally, on October 1, 2013 , we borrowed an additional $ 100.0 million
on the Term Loan, bringing the then outstanding principal balance to $835.0 million . Our evaluations determined modification accounting applied for each
refinancing and the additional borrowing. Modifications occurring less than one year apart were evaluated against the terms of the debt in place on year prior.
In May 2014 , we amended and restated the Credit Facility to increase the Term Loan to $1,100.0 million and the available capacity on the Revolving Credit
Loan to $150.0 million . The maturity dates of the Term Loan and Revolving Credit Loan were extended to May 13, 2021 and May 13, 2019 , respectively.
Borrowings under the refinanced Credit Facility bear interest at a rate equal to, at our option, either (a) LIBOR (not less than 1.0% for the Term Loan only) plus
3.25% per annum or (b) 2.25% per annum plus the highest of (i) the Federal Funds Rate plus 0.5% , (ii) the Prime Rate, or (iii) one-month LIBOR plus 1.0% .
The interest rate margins above reflect reductions of 0.25% following the IPO and an additional 0.25% due to our achievement of certain leverage criteria.
In evaluating the May 2014 amendment, we compared the net present value cash flows of the Term Loan in place one year prior to the date of the
amendment and the amended Term Loan, which varied by less than 1% , and concluded the loans were not substantially different. As a result, we accounted for the
Term Loan amendment as a debt modification and fees paid to the lenders of $5.4 million were recorded as an additional discount on the Term Loan. In addition,
as a result of the additional borrowing capacity of the Revolving Credit Loan, we accounted for the Revolving Credit Loan amendment as a modification. We
incurred $1.6 million of financing-related fees related to the modification of the Revolving Credit Loan, which were recorded as an asset to be amortized to interest
expense over the life of the related debt using the effective interest method.
In addition to paying interest on outstanding principal under the Term Loan, we are required to pay a commitment fee to the lenders under the Revolving
Credit Loan for any unutilized commitments. During 2015 , the commitment fee rate was reduced from 0.50% to 0.375% per annum due to our achievement of
certain leverage criteria.
The Credit Facility requires us to prepay outstanding term loans, subject to certain exceptions, with percentages of excess cash flow, proceeds of non-
ordinary course asset sales or dispositions of property, insurance or condemnation proceeds and proceeds from the incurrence of certain debt.
The Credit Facility contains certain covenants, including, among other things, covenants limiting our ability to incur additional indebtedness, sell assets,
incur additional liens, make certain fundamental changes, pay distributions and make certain investments. Additionally, the Credit Facility also requires us to
maintain certain financial ratios. All obligations under the Credit Facility are unconditionally guaranteed by the assets of substantially all of our subsidiaries. At
December 31, 2015 , we were not in violation of any covenants of the Credit Facility.
In April 2015 , we made a payment of $75.0 million to repay all amounts drawn on the Revolving Credit Loan. At December 31, 2015 , we have $150.0
million available for borrowing under the Revolving Credit Loan.
The estimated fair value of the Term Loan was $1,080.8 million at December 31, 2015 based on observable market prices for this loan, which is traded in a
less active market and is therefore classified as a Level 2 fair value measurement.
Senior Note
On December 16, 2011 , we issued the 9% Senior Note to Holdings. In April 2015, we made a payment to Holdings totaling $316.0 million to repay the
Senior Note, consisting of principal of $300.0 million , prepayment premium of $13.5 million , which was recorded as a loss on debt extinguishment, and accrued
interest of $2.5 million . Additionally, in connection with the repayment, $7.1 million of unamortized original issue discount and $0.8 million of deferred financing
costs were recorded as a loss on debt extinguishment. Following this payment, the Senior Note was canceled.
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