First Data 2010 Annual Report Download - page 97

Table of Contents
FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Debt Exchange
On December 17, 2010, FDC completed its private exchange offers ("Debt Exchange"), in which FDC offered to exchange its 9.875% Senior notes due
2015 and its 10.550% Senior PIK notes due 2015, subject to the maximum exchange amount of $6.0 billion, for the new securities, payable (i) 50% in new
8.25% Senior second lien notes due 2021 ("8.25% cash-pay notes") or, in new 8.75%/10.00% PIK Toggle senior second lien notes due 2022 ("PIK toggle
notes" and together with the 8.25% cash-pay notes, the "second lien notes"), and (ii) 50% in new 12.625% Senior Unsecured Notes due 2021. The maximum
aggregate principal amount of PIK toggle notes issuable in the exchange offers was $1.0 billion. The following table presents the results of the debt exchange.
Debt Exchange
Amounts
(in millions)
Notes exchanged
9.875% Senior notes due 2015 $ 2,966.5
10.55% Senior PIK notes due 2015 3,035.1
Total amount exchanged (a) $ 6,001.6
Notes issued
8.25% Senior second lien notes due 2021 $ 1,999.7
8.75%/10.00% PIK toggle senior second lien notes due 2022 1,000.0
12.625% Senior notes due 2021 3,000.0
Total amount issued (a) $ 5,999.7
(a) The difference between the total amount exchanged and the total amount issued relates primarily to a discount of the notes issued for exchanges subsequent to the early tender date.
FDC recorded $53.8 million in fees in conjunction with the debt exchange. The fees were recorded as a discount on the new notes and will be amortized
to interest expense over the remaining term of the loans.
9.875% Senior Notes and 10.55% Senior PIK (Payment In-Kind) Notes
FDC's 9.875% senior notes due September 24, 2015 are publicly tradable and require the payment of interest semi-annually on March 31 and
September 30.
FDC's senior PIK notes due September 24, 2015 are publicly tradable and require the payment of interest semi-annually on March 31 and
September 30. The terms 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 2010, prior to the exchange described above, and during 2009 and 2008, FDC increased the principal amount of these notes by $362.5 million,
$333.0 million and $197.4 million, respectively, in accordance with this provision.
The 9.875% senior notes and 10.55% senior PIK notes are unsecured and (i) rank senior in right of payment to all of FDC'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.
On December 17, 2010, FDC's 9.875% senior notes and 10.55% senior PIK notes were partially exchanged for new securities as discussed in the "Debt
exchange" section above.
11.25% Senior Subordinated Notes
FDC's publicly tradable 11.25% senior subordinated notes due March 31, 2016 require the payment of interest semi-annually on March 31 and
September 30.
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 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 subordinated notes.
96