First Data 2008 Annual Report Download - page 81

FIRST DATA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Short-Term Borrowings, net
In conjunction with the merger in September 2007, the Company entered into a $2.0 billion senior secured revolving credit facility with a term of six
years for which interest is payable based upon LIBOR plus an applicable margin. The Company had $18 million and $60 million outstanding against the
revolving credit facility as of December 31, 2008 and 2007, respectively. The Company utilizes its revolving credit facility on a short-term basis to fund
investing or operating activities when cash flows from operating activities are not sufficient. As of December 31, 2008, $1.7 billion remained available under
this facility after considering the amount outstanding above as well as the Lehman Brothers Holdings Inc. ("Lehman") matter and the letters of credit issued
under the facility both discussed below.
An affiliate of Lehman provides a commitment in the amount of $230.6 million of the Company's $2.0 billion senior secured revolving credit facility.
After filing for bankruptcy in September 2008, the affiliate declined to participate in a request for funding under the Company's senior secured revolving
credit agreement and the Company has no assurances that they will participate in any future funding requests or that the Company could obtain replacement
loan commitments from other banks. In the event the Company decides to draw upon the senior secured revolving credit facility and the affiliate of Lehman
does not fund its obligation in accordance with the credit agreement, the Company believes its remaining capacity under its senior secured revolving credit
facility is sufficient to meet its short-term and long-term liquidity needs. There are multiple institutions that have commitments under this facility with none
representing more than approximately 15% of the remaining capacity. The Company is monitoring the financial stability of other financial institutions that
have made commitments under the revolving credit facility. Certain of these financial institutions are receiving support from the federal government in light
of current financial conditions. Although these financial institutions remain highly-rated (in the A category or higher), their ability to satisfy their
commitments may be dependent on receiving continued support from the federal government.
The Company had a $1.5 billion commercial paper program in the 2007 predecessor period that was issued under a $1.5 billion revolving credit facility,
both of which terminated in conjunction with the merger.
The use of cash related to short-term borrowings in 2008 resulted from a net $42.0 million payment on the senior secured revolving credit facility as
well as timing of draws and payments on credit lines associated with settlement activity. The senior secured revolving credit facility can be used, without
covenant restriction, for working capital and general corporate purposes. The source of cash in the successor period from September 25, 2007 through
December 31, 2007 was related to $60 million drawn on the senior secured revolving credit facility as well as timing of draws and payments on credit lines
associated with settlement activity. The source of cash in the predecessor period from January 1, 2007 through September 24, 2007 related to timing of draws
and payments on credit lines associated with settlement activity. The source of cash in 2006 included net proceeds and cash outlays related to the issuance and
paydown of commercial paper partially offset by a net draw on a credit line associated with settlement activity.
Principal Payments on Long-Term Debt
During 2008, the Company made payments of $128.4 million related to its senior secured term loan facility and $81.7 million related to notes due in
2008 and repurchased $18.7 million in debt (par value of $30 million). In June 2008, the Company paid $34.1 million in fees in connection with a
modification of the bridge facilities which were capitalized as deferred financing costs.
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,
80