First Data 2009 Annual Report Download - page 144

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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. An additional basis swap
with a notional amount of $2.0 billion expired on June 24, 2009 and all other basis swaps with a combined
notional amount of $4.0 billion expire on September 24, 2010. The Company pays interest on its senior secured
term loan facility based on the one-month-LIBOR interest rate index to match the terms of the basis swaps.
Ineffectiveness associated with these hedges is recognized immediately in the Consolidated Statements of
Operations. 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 years ended
December 31, 2009 and December 31, 2008, the Company paid $129.0 million and $128.4 million, respectively,
of principal payments on the senior secured term loan facility in accordance with this provision ($119.0 million
and $117.7 million, respectively, related to the U.S. dollar denominated loan and $10.0 million and $10.7
million, respectively, related to the euro denominated loan). 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 and 10.55% Senior PIK (Payment In-Kind) notes
In conjunction with the merger in 2007, the Company entered into a $3.8 billion senior unsecured cash-pay
term loan facility and a $2.8 billion senior unsecured PIK term loan facility with terms of eight years. These
facilities represented bridge financing and interest was payable based upon LIBOR plus an applicable margin,
which margin gradually increased over time subject to certain cap rates noted below.
In June 2008 and after negotiation with the holders of the debt, the Company entered into an agreement with
the lenders which, among other things and most significantly, amended the interest rates on the senior unsecured
term loan facilities. Effective August 19, 2008, the interest rate on the cash-pay term loan facility increased to
9.875% and the interest rate on the PIK term loan facility increased to 10.55%. The rates effective August 19,
2008 were equivalent to the cap rates that were prescribed by the original loan agreements.
In October 2007, $2.2 billion of the senior unsecured cash-pay term loan facility was repaid upon issuance
of the 9.875% senior notes due 2015. Interest is payable on the notes March 31 and September 30 of each year.
On September 17, 2008, the Company launched a registered exchange offer to exchange the $2.2 billion
aggregate principal amount of its 9.875% senior notes due 2015 for publicly tradable notes having substantially
identical terms and guarantees, except that the exchange notes are freely tradable. Substantially all of the notes
were exchanged effective October 21, 2008. There was no expenditure, other than professional fees incurred in
connection with the Registration Statement itself, or receipt of cash associated with this exchange.
In accordance with the terms of the amended senior unsecured term loan facility and in September 2008, the
Company exchanged substantially all of the remaining balance of its 9.875% senior unsecured cash-pay term
loan bridge loans due 2015 as well as all of its 10.55% senior unsecured PIK term loan bridge loans due 2015 for
senior notes and senior PIK notes, respectively, in each case having substantially identical terms and guarantees
with the exception of interest payments being due semi-annually on March 31 and September 30 of each year
instead of quarterly. There was no expenditure, other than professional fees incurred in connection with the
Exchange Offering itself, or receipt of cash associated with this exchange.
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