First Data 2009 Annual Report Download - page 145

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
On August 10, 2009, the Company launched a registered exchange offer to exchange aggregate principal
amounts of $3.2 billion of its 10.55% senior PIK notes and $1.6 billion of its 9.875% senior notes (which
constituted all such notes outstanding at that date) 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 September 9, 2009. There was no expenditure, other than professional fees incurred in connection with
the Registration Statement itself, or receipt of cash associated with this exchange.
The terms of the Company’s senior PIK notes require that interest on these notes up to and including
September 30, 2011 be paid entirely by increasing the principal amount of the outstanding notes or by issuing senior
PIK notes. Beginning October 1, 2011, interest will be payable in cash and the first such payment will be in March
2012. During the years ended December 31, 2009 and December 31, 2008, the Company increased the principal
amount of these notes by $333.0 million and $197.4 million, respectively, in accordance with this provision.
The senior notes and senior PIK notes are unsecured and (i) rank senior in right of payment to all of the
Company’s existing and future subordinated indebtedness, (ii) rank equally in right of payment to all of the
existing and future senior indebtedness, (iii) are effectively subordinated in right of payment to all existing and
future secured debt to the extent of the value of the assets securing such debt, and (iv) are structurally
subordinated to all obligations of each subsidiary that is not a guarantor of the senior notes. All obligations under
the senior notes and senior PIK notes are fully and unconditionally guaranteed by substantially all domestic,
wholly-owned subsidiaries of the Company, subject to certain exceptions.
11.25% Senior subordinated notes
In conjunction with the merger in 2007, the Company entered into a senior subordinated unsecured term
loan facility of $2.5 billion with a term of nine years. This facility 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
subordinated unsecured term loan facility. Effective August 19, 2008, the interest rate increased to 11.25%. The
rate effective August 19, 2008 was equivalent to the cap rate that was prescribed by the original loan agreement.
In accordance with the terms of the amended senior subordinated unsecured term loan facility and in
September 2008, the Company exchanged all of its 11.25% senior subordinated unsecured term loan bridge loans
due 2016 for senior subordinated notes 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.
On August 10, 2009, the Company launched a registered exchange offer to exchange aggregate principal
amounts of $2.5 billion of its 11.25% senior subordinated notes (which constituted all such notes outstanding at
the date) 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 September 9, 2009. There was
no expenditure, other than professional fees incurred in connection with the Registration Statement itself, or
receipt of cash associated with this exchange.
The senior subordinated notes are unsecured and (i) rank equally in right of payment with all of the existing
and future senior subordinated debt, (ii) rank senior in right of payment to all future debt and other obligations
that are, by their terms, expressly subordinated in right of payment to the senior subordinated notes, (iii) are
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