Orbitz 2009 Annual Report Download - page 87

December 31, 2007, and we accreted $1 million of interest expense related to the liability. During the
year ended December 31, 2008, we made $1 million of termination payments and accreted $1 million
of interest expense related to this liability. At December 31, 2008, the net present value of the remain-
ing termination payments of $14 million was included in our consolidated balance sheets, $4 million
of which was included in accrued expenses and $10 million of which was included in other non-cur-
rent liabilities.
8. Term Loan and Revolving Credit Facility
On July 25, 2007, concurrent with the IPO, we entered into a $685 million senior secured credit
agreement (“Credit Agreement”) consisting of a seven-year $600 million term loan facility (“Term Loan”) and
a six-year $85 million revolving credit facility (“Revolver”).
Term Loan
The Term Loan bears interest at a variable rate, at our option, of LIBOR plus a margin of 300 basis
points or an alternative base rate plus a margin of 200 basis points. The alternative base rate is equal to the
higher of the Federal Funds Rate plus one half of 1% and the prime rate (“Alternative Base Rate”). The
principal amount of the Term Loan is payable in quarterly installments of $1.5 million beginning on
December 31, 2007, with the final installment of approximately $560 million due upon maturity on July 25,
2014. However, these payments could change, as beginning in the first quarter of 2009, we are required to
make mandatory prepayments on the Term Loan annually in an amount up to 50% of the prior year’s excess
cash flow, as defined in the Credit Agreement. Mandatory prepayments are applied, in order of maturity, to the
scheduled quarterly term loan principal payments. Based on our cash flow for the year ended December 31,
2008, we are not required to make a mandatory prepayment in the first quarter of 2009. The potential amount
of mandatory prepayments that will be required beyond the first quarter of 2009 is not reasonably estimable as
of December 31, 2008. At December 31, 2008 and December 31, 2007, $593 million and $599 million was
outstanding on the Term Loan, respectively.
At December 31, 2008, we have interest rate swaps outstanding that effectively convert $400 million of
the Term Loan to a fixed interest rate (see Note 14 — Derivative Financial Instruments). At December 31,
2008, $200 million of the Term Loan effectively bears interest at a fixed rate of 8.21%, $100 million of the
Term Loan effectively bears interest at a fixed rate of 6.39% and an additional $100 million of the Term Loan
effectively bears interest at a fixed rate of 5.98%, through these interest rate swaps. Of the remaining
$193 million of the Term Loan, $100 million bears interest at a variable rate of LIBOR plus 300 basis points,
or 4.46%, as of December 31, 2008, which is based on the three-month LIBOR, and $93 million bears interest
at a variable rate of LIBOR plus 300 basis points, or 3.46%, as of December 31, 2008, which is based on the
one-month LIBOR.
At December 31, 2007, we had interest rate swaps outstanding that effectively converted $300 million of
the Term Loan to a fixed interest rate of 8.21%. The remaining $299 million of the Term Loan had a variable
interest rate of LIBOR plus 300 basis points, or 7.85%, as of December 31, 2007.
Revolver
The Revolver provides for borrowings and letters of credit of up to $85 million and bears interest at a
variable rate, at our option, of LIBOR plus a margin of 250 basis points or an Alternative Base Rate plus a
margin of 150 basis points. The margin is subject to change based on our total leverage ratio, as defined in the
Credit Agreement, with a maximum margin of 250 basis points on LIBOR-based loans and 150 basis points
on Alternative Base Rate loans. We also incur a commitment fee of 50 basis points on any unused amounts on
the Revolver. The Revolver matures on July 25, 2013.
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ORBITZ WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)