First Data 2008 Annual Report Download - page 155

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company incurred a fee of $6.0 million in connection with this debt repurchase as well as an $11.2 million charge representing the premium paid for
consent from holders to modify terms of the Company's debt they held. In January 2007, the Company repurchased $32.4 million of its 4.7% senior notes due
August 1, 2013, $30.2 million of its 4.85% senior notes due October 1, 2014, and $28.0 million of its 4.95% senior notes due June 15, 2015. The Company
recognized a $1.4 million pretax gain upon the debt repurchase.
The gains and losses resulting from the debt repurchases were included in the "Other income (expense)" line of the Consolidated Statements of
Operations.
Senior secured term loan facility
In connection with the merger in 2007, the Company entered into a $13.0 billion senior secured term loan facility with a term of seven years. At the
merger date, the Company drew $11,775 million in the form of a U.S. dollar denominated loan and $1,000 million in the form of a euro denominated loan
(709.2 million euro). The remaining $225 million was available in the form of a delayed draw term loan facility. Interest is payable based upon LIBOR plus
an applicable margin.
During 2007, the Company entered into interest rate swaps with notional amounts totaling $7.5 billion to receive interest at variable rates equal to
LIBOR and pay interest at fixed rates. During 2008, the Company entered into basis rate swaps to modify the variable rates on $6.0 billion of the previously
executed $7.5 billion interest rate swaps and to lower the fixed interest rates on those interest rate swaps. The basis swaps pay interest at rates equal to three-
month-LIBOR and receive interest at rates equal to one-month-LIBOR plus a fixed spread. One basis swap with a notional amount of $2.0 billion expires on
June 24, 2009 and all other basis swaps with a combined notional amount of $4.0 billion expire on September 24, 2010. In the second quarter of 2008, the
Company also made a corresponding election on its senior secured term loan facility to change interest payments from three-month-LIBOR to one-month-
LIBOR interest rate index on a $6.0 billion principal amount to match the terms of the basis swaps. Having re-designated certain of its hedging relationships
to include the basis swaps, all of the interest rate swaps have been designated by the Company as hedges for accounting purposes. The net fixed rates on all of
the interest rate swaps associated with the senior secured term loan facility range from 3.779% to 5.2165%.
The terms of the Company's senior secured term loan facility require the Company to pay equal quarterly installments in aggregate annual amounts
equal to 1% of the original principal amount. During the year ended December 31, 2008 and the successor period from September 25, 2007 through
December 31, 2007, the Company paid $128.4 million and $32.0 million, respectively, of principal payments on the senior secured term loan facility in
accordance with this provision ($117.7 million and $29.4 million, respectively, related to the U.S. dollar denominated loan and $10.7 million and $2.6 million,
respectively, related to the euro denominated loan). The principal on this loan was increased by $100.4 million and $25.6 million during the year ended
December 31, 2008 and the period from September 25, 2007 through December 31, 2007, respectively, as a result of draws on the Company's delayed draw
term loan facility when equal amounts of pre-merger notes were repaid. As of December 31, 2008, the Company's ability to draw on its delayed draw term
loan expired. The senior secured term loan facility also requires mandatory prepayments based on a percentage of excess cash flow generated by the
Company. All obligations under the senior secured loan facility are fully and unconditionally guaranteed by substantially all domestic, wholly-owned
subsidiaries of the Company, subject to certain exceptions.
9.875% Senior notes due 2015
In October 2007, $2.2 billion of the senior unsecured cash-pay term loan facility, described below, was repaid upon issuance of the 9.875% senior
unsecured cash-pay notes due 2015. Interest is payable on March 31 and September 30 of each year.
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