Western Union 2006 Annual Report Download - page 91

Notes to Consolidated Financial Statements 89
Revolving Credit Facility
On September 27, 2006, the Company entered into a
five-year unsecured revolving credit facility, which includes
a $1.5 billion revolving credit facility, a $250.0 million letter
of credit sub-facility and a $150.0 million swing line
sub-facility (the “Revolving Credit Facility”). The Revolving
Credit Facility contained certain covenants that limit or
restrict the ability of the Company and other significant
subsidiaries to incur debt, collateralize, sell, assign, transfer
or otherwise dispose of specified assets, or enter into
specified sale and leaseback transactions. The Company
was also required to maintain compliance with a
consolidated interest coverage ratio covenant. In
October 2006, the Company repaid the entire $100 million
amount due under the Revolving Credit Facility which had
been borrowed in connection with the spin-off from
First Data. As a result, there were no borrowings or
accrued interest under the Revolving Credit Facility as of
December 31, 2006.
Interest due under the Revolving Credit Facility is fixed
for the term of each borrowing and is payable according
to the terms of that borrowing. Generally, interest is
calculated using LIBOR plus an interest rate margin (19
basis points as of December 31, 2006). A facility fee is
also payable quarterly on the total facility, regardless of
usage (6 basis points as of December 31, 2006). The facility
fee percentage is determined based on our credit rating
assigned by Standard & Poor’s Ratings Services (“S&P”)
and/or Moody’s Investor Services, Inc. (“Moody’s”).
In addition, to the extent the aggregate outstanding
borrowings under the Revolving Credit Facility exceed
50% of the related aggregate commitments, a utilization
fee based upon such ratings is payable to the lenders on
the aggregate outstanding borrowings (5 basis points as
of December 31, 2006).
Notes
On September 29, 2006, the Company issued to First Data
$1.0 billion aggregate principal amount of unsecured notes
maturing on October 1, 2016 (the “2016 Notes”) in partial
consideration for the contribution by First Data to the
Company of its money transfer and consumer payments
businesses in connection with the spin-off. The 2016 Notes
were issued in reliance on exemptions from the registration
requirements of the Securities Act of 1933, as amended.
Immediately after the spin-off, First Data exchanged the
2016 Notes with two financial institutions for indebtedness
of First Data that the financial institutions held at that
time. The financial institutions then sold the 2016 Notes
in transactions exempt from the registration requirements
of the Securities Act of 1933. The Company did not receive
any of the proceeds from the subsequent sale of the
2016 Notes.
Interest on the 2016 Notes is payable semiannually
on April 1 and October 1 each year based on a fixed per
annum interest rate of 5.930%. The indenture governing
the 2016 Notes contains covenants that limit or restrict
the ability of the Company and other significant subsidiaries
to incur debt (in the case of significant subsidiaries),
collateralize, sell, assign, transfer or otherwise dispose
of specified assets, or enter into sale and leaseback
transactions. The Company may redeem the 2016 Notes
at any time prior to maturity at the applicable treasury rate
plus 20 basis points.
On November 17, 2006, the Company issued $2 billion
aggregate principal amount of the Company’s unsecured
fixed and floating rate notes, comprised of $500 million
aggregate principal amount of the Company’s Floating Rate
Notes due 2008 (the “Floating Rate Notes”), $1 billion
aggregate principal amount of 5.400% Notes due 2011
(the “2011 Notes”) and $500 million aggregate principal
amount of 6.200% Notes due 2036 (the “2036 Notes”).
The Floating Rate Notes, 2011 Notes, and 2036 Notes
were issued in reliance on exemptions from the registration
requirements of the Securities Act of 1933, as amended.
The Company used the net proceeds of the offering
of the 2011 Notes, the 2036 Notes, and the Floating Rate
Notes, together with the proceeds of approximately
$400 million of commercial paper the Company issued, to
repay the entire $2.4 billion in principal amount outstanding
under a bridge loan facility entered into by the Company’s
subsidiary FFMC, described below. This repayment resulted
in the release and termination of certain guarantees entered
into by FFMC in connection with the spin-off relating to
our 2016 Notes and the Revolving Credit Facility.
Interest with respect to the 2011 Notes and
2036 Notes is payable semiannually on May 17 and
November 17 each year based on fixed per annum interest
rates of 5.400% and 6.200%, respectively. Interest
with respect to the Floating Rate Notes is payable
quarterly in arrears on February 17, May 17, August 17,
and November 17 each year at a per annum rate equal to
the three month LIBOR plus 15 basis points, reset quarterly
(5.52% at December 31, 2006). The indenture governing
the 2011 Notes, 2036 Notes and Floating Rate Notes
contains covenants that limit or restrict the ability of the
Company and other significant subsidiaries to incur debt
(in the case of significant subsidiaries), collateralize, sell,
assign, transfer or otherwise dispose of specified assets,
or enter into sale and leaseback transactions. The Company
may redeem the 2011 Notes and the 2036 Notes at any
time prior to maturity at the applicable treasury rate plus
15 basis points and 25 basis points, respectively. The
Company may redeem the Floating Rate Notes at any time
on or after May 17, 2007 at a redemption price equal to
100% of the principal amount of the Floating Rate Notes
to be redeemed plus accrued interest thereon to the date
of redemption.
In connection with the issuance of the 2011 Notes,
the 2016 Notes, the 2036 Notes, and the Floating Rate
Notes, the Company filed a registration statement on Form
S-4 with the Securities and Exchange Commission on
December 22, 2006, which provided the holders of the
notes an offer to exchange their previously issued notes
for identical notes which have been registered. The
exchange offer closed on February 6, 2007.