First Data 2012 Annual Report Download - page 87

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2014, FDC may redeem up to 35% of the aggregate principal amount of the notes with the net cash proceeds from certain equity
offerings at established redemption prices.
12.625% Senior Unsecured Notes
Interest on the 12.625% senior notes is payable in cash, accrues at the rate of 12.625% per annum, and is payable semi-annually
in arrears on January 15 and July 15. The 12.625% senior notes mature on January 15, 2021.
Effective December 2011, FDC exchanged substantially all of its 12.625% senior notes due 2021 for publicly tradable notes
having substantially identical terms and guarantees, except that the exchange notes are freely tradable. FDC may redeem the senior
notes, in whole or in part, at any time prior to January 15, 2016, at a price equal to 100% of the principal amount of the notes plus
accrued and unpaid interest to the redemption date and a “make-whole premium.” Thereafter, FDC may redeem the senior notes, in
whole or in part, at established redemption prices. In addition, on or prior to January 15, 2014, FDC may redeem up to 35% of the
aggregate principal amount of the notes with the net cash proceeds from certain equity offerings at established redemption prices.
9.875% Senior Unsecured Notes and 10.55% Senior Unsecured 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 10.55% senior 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 an 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 was
payable in cash and the first such payment was in April 2012. During 2011, FDC increased the principal amount of these notes by
$73.1 million in accordance with this provision.
11.25% Senior Unsecured 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.
Deferred Financing Costs
Deferred financing costs were capitalized in conjunction with certain of FDC’ s debt issuances and totaled $218.2 million and
$269.8 million, as of December 31, 2012 and 2011, respectively. Deferred financing costs are reported in the “Other long-term assets”
line of the Consolidated Balance Sheets and are being amortized on a straight-line basis, which approximates the interest method, over
the remaining term of the respective debt, with a weighted-average period of 6 years. In addition, lender fees associated with debt
modifications and amendments were capitalized as discounts on the debt and are similarly being amortized on a straight-line basis
over the remaining term of the respective debt.
Guarantees and Covenants
All obligations under the senior secured revolving credit facility and senior secured term loan facility are unconditionally
guaranteed by substantially all existing and future, direct and indirect, wholly-owned, material domestic subsidiaries of FDC other
than Integrated Payment Systems Inc. The senior secured facilities contain a number of covenants that, among other things, restrict
FDC’ s ability to incur additional indebtedness; create liens; enter into sale and leaseback transactions; engage in mergers or
consolidations; sell or transfer assets; pay dividends and distributions or repurchase FDC’ s or its parent company’ s capital stock; make
investments, loans or advances; prepay certain indebtedness; make certain acquisitions; engage in certain transactions with affiliates;
amend material agreements governing certain indebtedness and change its lines of business. The senior secured facilities also require
FDC to not exceed a maximum senior secured leverage ratio and contain certain customary affirmative covenants and events of
default, including a change of control. FDC is in compliance with all applicable covenants.
All senior secured notes are guaranteed on a senior secured basis by each of FDC’ s existing and future direct and indirect
wholly owned domestic subsidiaries that guarantees FDC’ s senior secured credit facilities. Each of the guarantees of the notes is a
general senior obligation of each guarantor and rank senior in right of payment to all existing and future subordinated indebtedness of
the guarantor subsidiary, including FDC’ s existing senior subordinated notes. The notes rank equal in right of payment with all
existing and future senior indebtedness of the guarantor subsidiary but are effectively senior to the guarantees of FDC’ s existing senior
87