American Home Shield 2011 Annual Report Download - page 55

Table of Contents
Under the terms of its fuel swap contracts, the Company is required to post collateral in the event that the fair value of the contracts exceeds a certain
agreed upon liability level and in other circumstances required by the counterparty. As of December 31, 2011, the estimated fair value of the Company's fuel
swap contracts was a net liability of $0.7 million, and the Company had posted $3.8 million in letters of credit as collateral under its fuel hedging program,
none of which were issued under the Company's Revolving Credit Facility. The continued use of letters of credit for this purpose could limit the Company's
ability to post letters of credit for other purposes and could limit the Company's borrowing availability under the Revolving Credit Facility. However, the
Company does not expect the fair value of its outstanding fuel swap contracts to materially impact its financial position or liquidity.
The Company's ongoing liquidity needs are expected to be funded by cash on hand, net cash provided by operating activities and, as required,
borrowings under the Revolving Credit Facility. We expect that cash provided from operations and available capacity under the Revolving Credit Facility will
provide sufficient funds to operate our business, make expected capital expenditures and meet our liquidity requirements for the following 12 months,
including payment of interest and principal on our debt. As of December 31, 2011, the Company had $442.5 million of remaining capacity available under the
Revolving Credit Facility.
On February 2, 2011, ServiceMaster entered into an amendment to its Revolving Credit Facility, which provides for senior secured revolving loans and
stand-by and other letters of credit. Prior to the amendment, the facility was scheduled to mature on July 24, 2013 and provided for maximum borrowing
capacity of $500.0 million with outstanding letters of credit limited to $75.0 million. The Company desired to extend the maturity date of the facility by one
year, and as an inducement for such extension, offered to allow any lenders in the syndicate group that were willing to extend the maturity date by one year a
20 percent reduction of such lender's loan commitment. As a result of the amendment, the Company had available borrowing capacity under its amended
Revolving Credit Facility of $442.5 million through July 24, 2013 and $229.6 million from July 25, 2013 through July 24, 2014.
On January 30, 2012, ServiceMaster entered into the Extension Amendment and the Increase Supplement to its Revolving Credit Facility. After
effectiveness on February 13, 2012 of the Extension Amendment and the Increase Supplement, we have available borrowing capacity under the Revolving
Credit Facility of $447.7 million through July 24, 2013, $324.2 million from July 25, 2013 through July 24, 2014 and $265.2 million from July 25, 2014
through January 31, 2017. The Company will continue to have access to letters of credit up to $75.0 million through January 31, 2017.
During the first quarter of 2009, the Company completed open market purchases of $89.0 million in face value of the 2015 Notes for a cost of
$41.0 million. The debt acquired by the Company has been retired, and the Company has discontinued the payment of interest. The Company recorded a gain
on extinguishment of debt of $46.1 million in its Consolidated Statements of Operations for the year ended December 31, 2009 related to these retirements.
During the fourth quarter of 2011, the Company purchased $65.0 million in face value of the 2015 Notes from Holdings for a cost of $68.0 million,
which included payment of accrued interest of $3.0 million. The debt acquired by the Company has been retired, and the Company has discontinued the
payment of interest. The Company recorded a loss on extinguishment of debt of $0.8 million in its Consolidated Statements of Operations for the year ended
December 31, 2011 for write-offs of unamortized debt issuance costs related to the extinguished debt.
In February 2012, the Company sold in transactions exempt from registration under the Securities Act of 1933, as amended, $600 million aggregate
principal amount of the 2020 Notes. The 2020 Notes will mature on February 15, 2020 and bear interest at a rate of 8 percent per
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