NetSpend 2013 Annual Report Download - page 54

On May 22, 2013, the Company closed its issuance
(the “Transaction”) of $550.0 million aggregate
principal amount of 2.375% Senior Notes due 2018
and $550.0 million aggregate principal amount of
3.750% Senior Notes due 2023 (collectively, the
“Notes”) pursuant to an Underwriting Agreement
with J.P. Morgan Securities LLC, as representative of
certain underwriters (the “Underwriters”), whereby
the Company agreed to sell and the Underwriters
agreed to purchase the Notes from the Company,
subject to and upon the terms and conditions set
forth in the Underwriting Agreement. The interest on
the Notes are payable semiannually. The Company
paid fees associated with the issuance of these Notes
of approximately $8.9 million and recorded discounts
of approximately $4.3 million that are being
amortized over the life of the Notes. The Company
used the net proceeds of the Transaction to pay a
portion of the $1.4 billion purchase price of the
Company’s acquisition of NetSpend and related fees
and expenses. The Notes were issued pursuant to an
Indenture dated as of May 22, 2013 between the
Company and Wells Fargo Bank, National
Association, as trustee. The Company received a
rating from Moody’s of Baa3 and a rating from
Standard & Poor’s of BBB+ in connection with the
Senior Notes at the time of issuance.
The Notes also contain various affirmative and
negative covenants, including those that create
limitations on the Company’s:
• creation of liens;
• merging or selling assets unless certain
conditions are met; and
• entering into sale/leaseback transactions.
The Notes also contain a provision that requires the
Company to repurchase all or any portion of a
holder’s Notes, at the holder’s option, if a Change in
Control Repurchase Event occurs.
Amendment to Existing Credit Agreement
On September 10, 2012, the Company entered into a
credit agreement with JPMorgan Chase Bank, N.A.,
as Administrative Agent, The Bank of Tokyo-
Mitsubishi UFJ, Ltd., Regions Bank and U.S. Bank
National Association, as Syndication Agents, and the
other lenders named therein, with J.P. Morgan
Securities LLC, The Bank of Tokyo-Mitsubishi UFJ,
Ltd., Regions Capital Markets and U.S. Bank National
Association, as joint lead arrangers and joint
bookrunners (the “Existing Credit Agreement”). The
Existing Credit Agreement provides for a
$350 million five-year unsecured revolving credit
facility (which may be increased by up to an
additional $350 million under certain circumstances)
and includes a $50 million subfacility for the issuance
of standby letters of credit and a $50 million
subfacility for swingline loans. The Existing Credit
Agreement also provides for a $150 million five-year
unsecured term loan, which was fully funded on the
closing of the Existing Credit Agreement. As of
December 31, 2013, the outstanding balance on the
Existing Credit Agreement was $138.8 million.
On April 8, 2013, the Company entered into the First
Amendment to the Existing Credit Agreement (the
“Revolver”) in order to conform certain provisions of
the Existing Credit Agreement to the Credit
Agreement for the Term Loan. On July 1, 2013, an
additional $100 million was used as funding in the
NetSpend Merger. As of December 31, 2013, there
was no outstanding balance on the Revolver.
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
bears 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 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
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