Go Daddy 2015 Annual Report Download - page 157

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• make a payment totaling $316.0 million to repay the senior note to Holdings;
• make a payment of $75.0 million to repay all amounts drawn on our revolving credit loan; and
• make a payment of $28.1 million to complete an acquisition.
We retained the remaining proceeds for general corporate purposes, which included working capital needs, sales and
marketing activities, solution and platform development, general and administrative activities and capital expenditures.
In general, we seek to deploy our capital in a systematically prioritized manner focusing first on requirements for operations,
then on growth investments, and finally on equity holder returns. Our strategy is to deploy capital from any potential source,
whether debt, equity or internally generated cash, depending on the adequacy and availability of the source of capital and which
source may be used most efficiently and at the lowest cost at that point in time. Therefore, while cash generated from operations is
our primary source of operating liquidity and we believe our internally generated cash flows are sufficient to support our day-to-
day business operations, we use a variety of capital sources to fund our needs for less predictable investment decisions such as
acquisitions.
We have incurred long-term debt, including under the Credit Facility described below, to fund acquisitions and for our
working capital needs. As a result of our debt, we are limited as to how we conduct our business and we may be unable to raise
additional debt or equity financing to compete effectively or to take advantage of new business opportunities. However, the
restrictions under our Credit Facility are subject to a number of qualifications and exceptions and may be amended with the
consent of our lenders.
We believe our existing cash and cash equivalents will be sufficient to meet our anticipated cash needs for at least the next
12 months. Our future capital requirements will depend on many factors including our growth rate, the timing and extent of
spending to support domestic and international development efforts, continued brand development and advertising spend, the
expansion of Customer Care and general and administrative activities, the introduction of new and enhanced product offerings,
the costs to support new and replacement capital equipment and the completion of strategic acquisitions.
Credit Facility
Our Credit Facility consists of the $1,100.0 million Term Loan maturing on May 13, 2021 and the available $150.0 million
Revolving Credit Loan maturing on May 13, 2019, as described in Note 9 to our consolidated financial statements. The Credit
Facility is subject to customary fees for loan facilities of this type, including a commitment fee on the Revolving Credit Loan. The
Term Loan is required to be repaid in quarterly installments of 0.25% of the original principal, with the remaining balance due at
maturity. The Term Loan must be repaid with proceeds from certain asset sales and debt issuances and with a portion of our
excess cash flow, up to 50.0%, depending on our net leverage ratio. The Credit Facility is guaranteed by all of our material
domestic subsidiaries and is secured by substantially all of our and such subsidiaries’ real and personal property.
The Credit Facility contains covenants restricting, among other things, our ability, or the ability of our subsidiaries, to incur
indebtedness, issue certain types of equity, incur liens, enter into fundamental changes including mergers and consolidations, sell
assets, make restricted payments including dividends, distributions and investments, prepay junior indebtedness, make certain
intercompany distributions and engage in operations other than in connection with acting as a holding company, subject to
customary exceptions. The Revolving Credit Loan also contains a financial covenant requiring us to maintain a maximum net
leverage ratio of 7.25:1.00 at all times our usage exceeds 30.0% of the maximum capacity. The net leverage ratio is calculated as
the ratio of first lien secured debt less cash and cash equivalents to consolidated EBITDA (as defined in the Credit Facility). As of
December 31, 2015, we were in compliance with all such covenants and we had no amounts drawn on the Revolving Credit Loan.
Senior Note
As described above and in Note 9 to our consolidated financial statements, in April 2015, we repaid the senior note to
Holdings in full. The senior note was canceled following this repayment.