Go Daddy 2015 Annual Report Download - page 73

Table of Contents
•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.
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