Western Union 2008 Annual Report Download - page 76

WESTERN UNION
2008 Annual Report
7474
Term Loan
On December 5, 2008, the Company entered into a senior,
unsecured, 364-day term loan in an aggregate principal
amount of $500 million (the “Term Loan”) with a syndicate
of lenders. The Term Loan contains covenants which,
among other things, limit or restrict the Company’s ability
to sell or transfer assets or enter into a merger or consoli-
date with another company, grant certain types of security
interests, incur certain types of liens, impose restrictions
on subsidiary dividends, enter into sale and leaseback
transactions, or incur certain subsidiary level indebted-
ness. The Company is also required to maintain compli-
ance with a consolidated interest coverage ratio covenant.
Prepayments of loans are allowed and are required based
on the cash proceeds from other indebtedness, issuance
of equity, or sale of assets over $250 million.
The Term Loan allows the selection between two dif-
ferent respective interest rate calculations. For the current
interest rate, the Company selected an interest rate cal-
culated using the one-month LIBOR plus a 2% applicable
margin (3.875% at December 31, 2008). A loan fee is also
payable quarterly, beginning December 31, 2008, on the
total loan (50 basis points as of December 31, 2008). The
applicable margin and loan fee percentage are deter-
mined based on our credit ratings assigned by S&P and/
or Moody’s. A duration fee is payable 90 days and 180
days after the closing date of December 5, 2008 equal
to 0.25% and 0.50%, respectively, of the loan balance on
each date.
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 in partial consider-
ation for the contribution by First Data to the Company of
its money transfer and consumer payments businesses in
connection with the Spin-off.
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, among other
things, limit or restrict the ability of the Company and other
significant subsidiaries to grant certain types of security
interests, incur debt (in the case of significant subsidiar-
ies) 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
and $500 million aggregate principal amount of 6.200%
Notes due 2036 (the “2036 Notes”). The Floating Rate
Notes were redeemed upon maturity in November 2008.
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. The indenture govern-
ing the 2011 Notes and 2036 Notes contains covenants
that, among other things, limit or restrict the ability of the
Company and other significant subsidiaries to grant cer-
tain types of security interests, incur debt (in the case of
significant subsidiaries), 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.
16. Stock Compensation Plans
Stock Compensation Plans
The Western Union Company 2006 Long-Term
Incentive Plan
The Western Union Company 2006 Long-Term Incentive
Plan (“2006 LTIP”) provides for the granting of stock
options, restricted stock awards and units, unrestricted
stock awards, and other equity-based awards, to employ-
ees and other key individuals who perform services for the
Company. A maximum of 120.0 million shares of common
stock may be awarded under the 2006 LTIP, of which
37.3 million shares are available as of December 31, 2008.
Options granted under the 2006 LTIP are issued with
exercise prices equal to the fair market value of Western
Union common stock on the grant date, have 10-year
terms, and vest over four equal annual increments begin-
ning 12 months after the date of grant. Compensation
expense related to stock options is recognized over the
requisite service period. The requisite service period for
stock options is the same as the vesting period, with the
exception of retirement eligible employees, who have
shorter requisite service periods ending when the employ-
ees become retirement eligible.
Restricted stock awards and units granted under the
2006 LTIP typically become 100% vested on the three year
anniversary of the grant date. The fair value of the awards
granted is measured based on the fair market value of the
shares on the date of grant, and the related compensation
expense is recognized over the requisite service period
which is the same as the vesting period.
On September 29, 2006, the Company awarded a
founders’ grant of either restricted stock awards or units
to certain employees who are not otherwise eligible to
receive stock-based awards under the 2006 LTIP. These
awards vested in two equal annual increments on the
first and second anniversary of the grant date. The fair
value of the awards granted was measured based on the
when-issued closing price of the Company’s common
stock of $19.13 on the grant date and was recognized
ratably over the vesting period. Included in the 3.5 million
restricted stock awards and units issued under the 2006
LTIP described in the preceding paragraph, were 0.3 mil-
lion restricted stock awards or units issued in connection
with the founders’ grant.
The Western Union Company 2006 Non-Employee
Director Equity Compensation Plan
The Western Union Company 2006 non-employee director
equity compensation plan (“2006 Director Plan”) provides
for the granting of equity-based awards to non-employee
directors of the Company. Options granted under the