Sallie Mae 2009 Annual Report Download - page 179

7. Borrowings (Continued)
On February 27, 2009, the Company extended the maturity date of the 2008 Asset-Backed Loan Facility
from February 28, 2009 to April 28, 2009 for a $4 million upfront fee. The other terms of this facility
remained materially unchanged.
On April 24, 2009, the Company extended the maturity of $21.8 billion of the 2008 FFELP ABCP
Facility for one year to April 23, 2010. The Company also extended its 2008 Asset-Backed Loan Facility in
the amount of $1.5 billion. The extended 2008 Asset-Backed Loan Facility matured on June 26, 2009 and was
paid in full. A total of $86 million in fees were paid related to these extensions. The 2008 Private Education
Loan ABCP Facility was paid off and terminated on April 24, 2009. The stated borrowing rate of the 2008
FFELP ABCP Facility was the applicable funding rate plus 130 basis points excluding upfront fees. The
applicable funding rate generally was either a LIBOR or commercial paper rate. The terms of the 2008 FFELP
ABCP Facility called for an increase in the applicable funding spread to 300 basis points if the outstanding
borrowing amount was not reduced to $15.2 billion and $10.9 billion as of June 30, 2009 and September 30,
2009, respectively. If the Company did not negotiate an extension or pay off all outstanding amounts of the
2008 FFELP ABCP Facility at maturity, the facility would extend by 90 days with the interest rate generally
increasing from LIBOR plus 250 basis points to 550 basis points over the 90 day period. The other terms of
the facilities remained materially unchanged.
The maximum amount the Company could borrow under the 2008 FFELP ABCP Facility was limited
based on certain factors, including market conditions and the fair value of student loans in the facility. As of
December 31, 2009, the maximum borrowing amount was approximately $10.5 billion. Funding under the
2008 FFELP ABCP Facility was subject to usual and customary conditions. The 2008 FFELP ABCP Facility
was subject to termination under certain circumstances, including the Company’s failure to comply with the
principal financial covenants in its unsecured revolving credit facilities.
Borrowings under the 2008 FFELP ABCP Facility were non-recourse to the Company. As of Decem-
ber 31, 2009, the Company had $8.8 billion outstanding in connection with the 2008 FFELP ABCP Facility.
The book basis of the assets securing this facility as of December 31, 2009 was $10.2 billion.
On January 15, 2010, the Company terminated the 2008 FFELP ABCP Facility and entered into new
multi-year ABCP facilities (the “2010 Facility”) which will continue to provide funding for the Company’s
federally guaranteed student loans. The 2010 Facility provides for maximum funding of $10 billion for the
first year, $5 billion for the second year and $2 billion for the third year. Upfront fees related to the 2010
Facility were approximately $4 million. The underlying cost of borrowing under the 2010 Facility for the first
year is expected to be approximately commercial paper issuance cost plus 0.50 percent, excluding up-front
commitment and unused fees.
Borrowings under the 2010 Facility are non-recourse to the Company. The maximum amount the
Company may borrow under the 2010 Facility is limited based on certain factors, including market conditions
and the fair value of student loans in the facility. Funding under the 2010 Facility is subject to usual and
customary conditions. The 2010 Facility is subject to termination under certain circumstances, including the
Company’s failure to comply with the principal financial covenants in its unsecured revolving credit facilities.
Increases in the borrowing rate of up to LIBOR plus 450 basis points could occur if certain asset coverage
ratio thresholds are not met. Failure to pay off the 2010 Facility on the maturity date or to reduce amounts
outstanding below the annual maximum step downs will result in a 90-day extension of the 2010 Facility with
the interest rate increasing from LIBOR plus 200 basis points to LIBOR plus 300 basis points, over that
period. If, at the end of the 90-day extension, these required paydown amounts have not been made, the
collateral can be foreclosed upon.
F-52
SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts, unless otherwise stated)