NetSpend 2012 Annual Report Download - page 49

borrowed in full at closing. The Company is required
to make quarterly principal payments on the term
loan commencing on December 31, 2012 equal to
(i) 1.25% of the original principal amount of the term
loan for the first 12 such quarterly payments and
(ii) 2.50% of the original principal amount of the term
loan for the remaining quarterly principal payments.
The Company is required to repay the entire
remaining principal balance of the term loan in full on
September 10, 2017. At the Company’s option, the
outstanding principal balance of the term loan will
bear interest at a rate equal to (i) LIBOR for U.S.
Dollars plus an applicable margin ranging from 1.00%
to 1.75% depending on the Company’s corporate
credit rating, or (ii) the base rate described above
plus an applicable margin ranging from 0% to 0.75%
depending on the Company’s corporate credit rating,
which is currently a “BBB+” investment grade rating
from Standard and Poors.
The Company may prepay loans made under the
revolving credit facility and the term loan in whole or in
part at any time without premium or penalty, subject to
reimbursement of the lenders’ customary breakage and
redeployment costs in the case of prepayment of
LIBOR borrowings. The Credit Agreement includes
covenants requiring the Company to maintain certain
minimum financial ratios and also contains certain
customary representations and warranties, affirmative
and negative covenants and provisions relating to
events of default and remedies.
The proceeds of the term loan were used to retire
indebtedness outstanding under the Company’s
previous credit facility. The Company may use
extensions of credit under the revolving credit facility
for working capital and other lawful corporate
purposes, including to finance the repurchase by the
Company of the Company’s capital stock.
On September 10, 2012 and in connection with
entering into the credit facilities described above, the
Company terminated its existing credit agreement
dated as of December 21, 2007 with Bank of America
N.A., as Administrative Agent, The Royal Bank of
Scotland plc, as Syndication Agent, and the other
lenders named therein. That credit agreement
provided for a $252 million five-year unsecured
revolving credit facility and a $168 million five-year
term loan, both of which were scheduled to mature
on December 21, 2012. No material early termination
penalties were incurred as a result of the termination.
The Credit Agreement for the aforementioned loan
provided for a $168 million unsecured five year term
loan to the Company and a $252 million five year
unsecured revolving credit facility. The principal
balance of loans outstanding under the credit facility
had an interest at a rate of LIBOR plus an applicable
margin of 0.60%. The applicable margin could vary
within a range from 0.27% to 0.725% depending on
changes in the Company’s corporate credit rating.
Interest was paid on the last date of each interest
period; however, if the period exceeded three
months, interest was paid every three months after
the beginning of such interest period. In addition, the
Company is paid each lender a fee in respect of the
amount of such lender’s commitment under the
revolving credit facility (regardless of usage), ranging
from 0.08% to 0.15% (currently 0.10%) depending on
the Company’s corporate credit rating.
The Company was not required to make any
scheduled principal payments other than payment of
the entire outstanding balance on December 21,
2012. The Company was able to prepay the revolving
credit facility and the term loan in whole or in part at
any time without premium or penalty, subject to
reimbursement of the lenders’ customary breakage
and redeployment costs in the case of prepayment of
LIBOR borrowings. The Credit Agreement included
covenants requiring the Company to maintain certain
minimum financial ratios. The Company did not use
the revolving credit facility in 2012, 2011 or 2010.
Due to increases in transaction volumes, TSYS
acquired additional mainframe software licenses to
increase capacity. The Company entered into an $8.6
million and an $11.9 million financing agreement in
June and December of 2012, respectively, to
purchase these additional software licenses.
In December 2010, the Company obtained a $39.8
million note payable from a third-party vendor
related to financing the purchase of distributed
systems software.
On October 30, 2008, the Company’s International
Services segment obtained a credit agreement from
a third-party to borrow up to approximately
¥2.0 billion, or $21 million, in a Yen-denominated
three-year loan to finance activities in Japan. The rate
is LIBOR plus 80 basis points. The Company initially
made a draw of ¥1.5 billion, or approximately
$15.1 million. In January 2009, the Company made
an additional draw down of ¥250 million, or
approximately $2.8 million. In April 2009, the
Company made an additional draw down of
¥250 million, or approximately $2.5 million. On
December 30, 2011, the Company modified its loan
to extend the maturity date to November 5, 2014.
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