First Data 2011 Annual Report Download - page 48

with affiliates; amend material agreements governing certain indebtedness; and change its lines of business. The senior secured
facilities also require the Company to not exceed a maximum senior secured leverage ratio and contain certain customary affirmative
covenants and events of default, including a change of control. 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 notes, senior second lien notes, PIK toggle senior second lien notes, senior notes and
senior subordinated notes are similarly guaranteed in accordance with their terms by each of the Company's domestic subsidiaries that
guarantee obligations under the Company's senior secured term loan facility described above. These notes and facilities also contain a
number of covenants similar to those described for the senior secured obligations noted above. The Company is in compliance with all
applicable covenants as of December 31, 2011 and anticipates it will remain in compliance in future periods.
Although all of the above described indebtedness contain restrictions on the Company's ability to incur additional indebtedness,
these restrictions are subject to numerous qualifications and exceptions, including the ability to incur indebtedness in connection with
the Company's settlement operations. The Company believes that the indebtedness that can be incurred under these exceptions as well
as additional credit under the existing senior secured revolving credit facility are sufficient to satisfy the Company's intermediate and
long-term needs.
Covenant compliance. Under the senior secured revolving credit and term loan facilities, certain limitations, restrictions and
defaults could occur if the Company is not able to satisfy and remain in compliance with specified financial ratios. The Company has
agreed that it will not permit the Consolidated Senior Secured Debt to Consolidated EBITDA (both as defined in the agreement) Ratio
for any 12 month period (last four fiscal quarters) ending during a period set forth below to be greater than the ratio set forth below
opposite such period:
Period Ratio
October 1, 2011 to September 30, 2012 6.50 to 1.00
October 1, 2012 to September 30, 2013 6.25 to 1.00
Thereafter 6.00 to 1.00
The breach of this covenant could result in a default under the senior secured revolving credit facility and the senior secured
term loan credit facility and the lenders could elect to declare all amounts borrowed due and payable. Any such acceleration could also
result in a default under the indentures for the senior secured notes, senior second lien notes, PIK toggle senior second lien notes,
senior PIK notes and senior subordinated notes. As of December 31, 2011, the Company is in compliance with this covenant with
Consolidated Senior Secured Debt of $12,084.0 million, Consolidated EBITDA of $2,794.1 million and a Ratio of 4.32 to 1.00.
In determining Consolidated EBITDA, EBITDA is calculated by reference to net income (loss) from continuing operations plus
interest and other financing costs, net, provision for income taxes, and depreciation and amortization. Consolidated EBITDA as
defined in the agreements (also referred to as debt covenant EBITDA) is calculated by adjusting EBITDA to exclude unusual items
and other adjustments permitted in calculating covenant compliance under the indentures and the credit facilities. The Company
believes that the inclusion of supplementary adjustments to EBITDA applied in presenting Consolidated EBITDA are appropriate to
provide additional information to investors to demonstrate the Company's ability to comply with its financing covenants.
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