First Data 2007 Annual Report Download - page 122

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Interest is payable at a rate equal to, at the Company's option, either (a) LIBOR for deposits in the applicable currency plus an applicable margin or
(b) the higher of (1) the prime rate of Credit Suisse and (2) the federal funds effective rate plus 0.50%, plus an applicable margin. The Company, however,
made an irrevocable election to pay interest for the senior secured term loan facility solely under option (a). In combination with the debt issuance, the
Company designated as accounting hedges two five-year interest rate swaps related to the senior secured term loan facility with notional amounts of $2.0
billion and $1.0 billion to receive interest at variable rates equal to LIBOR and pay interest at fixed rates of 4.978% and 5.2475%, respectively. The Company
entered into additional interest rate swaps in the successor period with an aggregate notional value of $4.5 billion to receive interest at variable rates equal to
LIBOR and pay interest at fixed rates from 3.8665% to 4.924%.
The interest rate margin noted above may be reduced subject to the Company attaining certain leverage ratios. In addition to paying interest on the
outstanding principal amounts, the Company is required to pay commitment fees for the unutilized commitments. The initial commitment fee rates are
0.50% per year for the senior secured revolving credit facility and 0.75% per year on the delayed draw portion of the senior secured term loan facility. The
commitment fee rate related to the senior secured revolving credit facility may be reduced subject to the Company reducing its leverage to specified ratios.
The Company is required to pay equal quarterly installments in aggregate annual amounts equal to 1% of the original funded principal amount of the
senior secured term loan facility, with the balance being payable on the final maturity date. Principal amounts outstanding under the senior secured revolving
credit facility are due and payable in full at maturity. In December 2007, the Company paid approximately $32 million for both the U.S. dollar and euro-
denominated term loans related to this provision.
The senior secured credit facilities contain certain mandatory prepayment requirements, such as excess cash flow, in certain circumstances, and certain
prepayment penalties related to the senior secured term loan facility. Voluntary prepayments are allowed under certain circumstances. The Company may
prepay outstanding loans under the senior secured revolving credit facility at any time.
Senior Notes
On October 24, 2007, the Company issued $2.2 billion aggregate principal amount of 9.875% senior notes due 2015, the net proceeds of which,
together with cash on hand for the underwriting fees paid in connection with such sale, were used to repay $2.2 billion of the senior unsecured cash-pay term
loan facility, described below. The senior notes are unsecured and rank senior in right of payment with all of the Company's existing and future subordinated
indebtedness. The senior notes rank equally in right of payment with all of the existing and future senior indebtedness, including under the senior unsecured
interim credit facilities. The senior note guarantees are unsecured and rank senior in right of payment to all existing and future subordinated indebtedness of
the Company's guarantor subsidiaries and its senior subordinated unsecured interim credit facility. The senior note guarantees rank equally in right of payment
with all existing and future senior indebtedness of the guarantor subsidiaries, including their guarantees under the senior unsecured interim credit facilities.
The notes accrue interest at the rate of 9.875% per annum and mature on September 24, 2015. Interest on the notes is payable on March 31 and
September 30 of each year, commencing on March 31, 2008.
The Company may redeem the notes, in whole or in part, at any time prior to September 30, 2011 at a price equal to 100% of the principal amount of
the notes redeemed plus accrued and unpaid interest to the redemption date and a "make-whole premium" as defined. Thereafter, the Company may redeem
the notes, in whole or in part, at established redemption prices. In addition, on or prior to September 30, 2010, the Company may redeem up to 35% of the
notes with the net cash proceeds from certain equity offerings at established redemption prices.
The terms of the senior notes require the Company to file a registration statement with the United States Securities and Exchange Commission (the
"SEC") relating to an offer to exchange the notes and guarantees for publicly tradable notes and guarantees having substantially identical terms within 360
days of the original issue date of the notes. Additionally, the Company is required to use its reasonable best efforts to keep effective the shelf registration
statement until the earliest of (i) two years after the original issue date of the notes, (ii) such time as all of the notes have been sold or (iii) the date upon which
all notes covered by such shelf registration statement become eligible for resale. If a registration statement is not filed and effective or is not maintained
effective as noted above, then additional interest will accrue on the principal amount of the notes at a rate of 0.25% per annum increasing an additional
0.25% per annum after a 90-day period not to exceed 0.5% per annum. Once the registration is effective in accordance with the above requirements such
additional interest will cease to accrue. At this time no additional interest has accrued or is expected to be accrued.
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