First Data 2012 Annual Report Download - page 88

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
unsecured notes and FDC’ s existing senior secured second lien notes to the extent of the guarantor subsidiary’ s value of the collateral
securing the notes. The 7.375% Senior Secured First Lien Notes, 8.875% Senior Secured First Lien Notes, and 6.75% Senior Secured
First Lien Notes are effectively equal in right of payment with each other and the guarantees of FDC’ s senior secured credit facilities.
Each series of notes are effectively subordinated to any obligations secured by liens permitted under the indenture for the particular
series of notes and structurally subordinated to any existing and future indebtedness and other liabilities of any subsidiary of a
guarantor that is not also a guarantor of the notes.
All senior unsecured notes (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.
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.
All obligations under the senior secured notes, senior secured second lien notes, PIK toggle senior second lien notes, senior
unsecured notes, and senior unsecured subordinated notes also contain a number of covenants similar to those described for the senior
secured obligations noted above. FDC is in compliance with all applicable covenants.
Debt transactions effected subsequent to December 31, 2012
Debt Offering and Debt Repurchase. On January 30, 2013, FDC commenced a tender offer to purchase for cash any and all
of its outstanding 10.55% senior unsecured notes. The tender offer expired on February 27, 2013. Noteholders that validly tendered
their notes on or before February 12, 2013 received an early tender premium. The completion of the tender offer was subject to the
debt offering described below and certain other conditions. In addition, on March 1, 2013, FDC redeemed the outstanding 10.55%
senior unsecured notes that were not repurchased upon completion of the tender offer.
On February 13, 2013, the Company issued $785 million aggregate principal amount of 11.25% senior unsecured notes due
January 15, 2021. Interest on the notes will be payable in cash semi-annually on May 15 and November 15 of each year, commencing
on November 15, 2013. FDC used the proceeds from the offering to repurchase all of its outstanding 10.55% senior unsecured notes as
described above and to pay related fees and expenses.
The notes are unsecured and (i) rank senior in right of payment to any existing and future subordinated indebtedness, including
the existing senior subordinated notes; (ii) rank equally in right of payment to any existing and future senior indebtedness; (iii) be
effectively junior to all existing and future secured indebtedness, including indebtedness under the senior secured credit facilities,
existing senior secured notes, existing senior secured second lien notes and capital leases to the extent of the collateral securing such
indebtedness; and (iv) be effectively subordinated in right of payment to all existing and future indebtedness and other liabilities of the
non-guarantor subsidiaries (other than indebtedness and liabilities owed to the Company or one of its subsidiary guarantors).
The notes are similarly guaranteed in accordance with their terms by each of FDC’ s domestic subsidiaries that guarantee
obligations under FDC’ s senior secured term loan facility described above. The notes also contain a number of covenants similar to
those described for the senior secured obligations noted above.
FDC may redeem the 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 redeemed plus accrued and unpaid interest to the redemption date and a “make-whole premium.” Thereafter,
FDC may redeem the notes, in whole or in part, at established redemption prices. In addition, until January 15, 2016, FDC may
redeem up to 35% of the aggregate principal amount of the notes at 111.25% with the net cash proceeds of one or more equity
offerings.
FDC has agreed to use its reasonably best efforts to register notes with the SEC having substantially identical terms as the
11.25% senior unsecured notes, as part of an offer to exchange freely tradable exchange notes for the 11.25% senior unsecured notes
within 360 days after the issue date. If FDC fails to complete the exchange or, if required, to have a shelf registration statement
declared effective within that time period (‘‘registration default’ ’ ), the annual interest rate on the notes will increase by 0.25%. The
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