Orbitz 2011 Annual Report Download - page 47

47
by us was retired pursuant to the terms of the Amendment. During the years ended December 31, 2010 and 2009, we purchased
aggregate principal amounts of the Term Loan totaling $63.6 million and $10.0 million, respectively.
The Term Loan and Revolver are both secured by substantially all of our and our domestic subsidiaries' tangible and
intangible assets, including a pledge of 100% of the outstanding capital stock or other equity interests of substantially all of our
direct and indirect domestic subsidiaries and 65% of the capital stock or other equity interests of certain of our foreign
subsidiaries, subject to certain exceptions. The Term Loan and Revolver are also guaranteed by substantially all of our domestic
subsidiaries.
The Credit Agreement contains various customary restrictive covenants that limit our ability to, among other things:
• incur additional indebtedness or enter into guarantees;
• enter into sale or leaseback transactions;
• make investments, loans or acquisitions;
• grant or incur liens on our assets;
• sell our assets;
• engage in mergers, consolidations, liquidations or dissolutions;
• engage in transactions with affiliates; and
• make restricted payments.
The Credit Agreement requires us to maintain a minimum fixed charge coverage ratio and not exceed a maximum total
leverage ratio, each as defined in the Credit Agreement. We are required to maintain a minimum fixed charge coverage ratio of
1 to 1 and not exceed a maximum total leverage ratio of 3.0 to 1 for the remainder of the Credit Agreement. As of
December 31, 2011, we were in compliance with all covenants and conditions of the Credit Agreement.
In addition, we are required to make an annual prepayment on the Term Loan in the first quarter of each fiscal year in an
amount up to 50% of the prior year’s excess cash flow, as defined in the Credit Agreement. Based on our excess cash flow for
the year ended December 31, 2010, we made a $19.8 million prepayment on the Term Loan in the first quarter of 2011.
Prepayments from excess cash flow are applied, in order of maturity, to the scheduled quarterly Term Loan principal payments.
Due to the total excess cash flow payments that we have made, we are not required to make any scheduled principal payments
on the Term Loan for the remainder of its term. Based on our excess cash flow for the year ended December 31, 2011, we are
required to make a $32.2 million prepayment from excess cash flow in the first quarter of 2012. The potential amount of
prepayment from excess cash flow that will be required beyond the first quarter of 2012 is not reasonably estimable as of
December 31, 2011.
When we were a wholly-owned subsidiary of Travelport, Travelport provided guarantees, letters of credit and surety
bonds on our behalf under our commercial agreements and leases and for the benefit of regulatory agencies. Under the
Separation Agreement, entered into in connection with the July 2007 initial public offering (the “IPO”), we are required to use
commercially reasonable efforts to have Travelport released from any then outstanding guarantees and surety bonds. Travelport
no longer provides surety bonds on our behalf or guarantees in connection with commercial agreements or leases entered into
or replaced by us subsequent to the IPO. At December 31, 2011 and 2010, there were $74.2 million and $72.3 million of
outstanding letters of credit issued by Travelport on our behalf, respectively. Travelport has agreed to issue U.S. dollar
denominated letters of credit on our behalf in an aggregate amount not to exceed $75.0 million so long as Travelport and its
affiliates (as defined in the Separation Agreement) own at least 50% of our voting stock.
Travelport charges us fees for issuing, renewing or extending letters of credit on our behalf. In December 2011, we
agreed to make a one-time payment to Travelport, on February 1, 2012, of $3.0 million related to fees associated with a recent
amendment to the Travelport credit facility under which Travelport issues letters of credit on behalf of the Company. This
payment is subject to a refund obligation through September 30, 2013 if we obtain our own letter of credit facility or if
Travelport is otherwise no longer obligated to provide letters of credit on our behalf. We are recognizing the $3.0 million
payment to Travelport over the term of its underlying credit facility, or approximately two and a half years. The expenses
related to these fees are included in interest expense in our consolidated statements of operations.