First Data 2014 Annual Report Download - page 99

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As described in Note 6 "Borrowings" of these Consolidated Financial Statements, FDC’s 12.625% senior notes, 11.25% senior notes, 10.625% senior notes,
and 11.75% senior subordinated notes are guaranteed by most of the existing and future, direct and indirect, wholly owned, domestic subsidiaries of FDC
(Guarantors). The Guarantors guarantee the senior secured revolving credit facility, senior secured term loan facility, the 8.875% senior secured notes, the
7.375% senior secured notes, and the 6.75% senior secured notes, which rank senior in right of payment to all existing and future unsecured and second lien
indebtedness of FDC’s guarantor subsidiaries to the extent of the value of the collateral. The Guarantors guarantee the 8.25% and 8.75% senior second lien
notes which rank senior in right of payment to all existing and future unsecured indebtedness of FDC’s guarantor subsidiaries to the extent of the value of the
collateral. The 12.625% senior note, 10.625% senior note, and 11.25% senior note guarantees are unsecured and rank equally in right of payment with all
existing and future senior indebtedness of the guarantor subsidiaries but senior in right of payment to all existing and future subordinated indebtedness of
FDC’s guarantor subsidiaries. The 11.75% senior subordinated note guarantee is unsecured and ranks equally in right of payment with all existing and future
senior subordinated indebtedness of the guarantor subsidiaries.
All of the above guarantees are full, unconditional, and joint and several and each of the Guarantors is 100% owned, directly or indirectly, by FDC. None of
the other subsidiaries of FDC, either direct or indirect, guarantee the notes (Non-Guarantors). The Guarantors are subject to release under certain
circumstances as described below.
The credit agreement governing the guarantees of the senior secured revolving credit facility and senior secured term loan facility provide for a Guarantor to
be automatically and unconditionally released and discharged from its guarantee obligations in certain circumstances, including under the following
circumstances:
• the Guarantor ceases to be a “restricted subsidiary” for purpose of the agreement because FDC no longer directly or indirectly owns 50% of
the equity or, if a corporation, stock having voting power to elect a majority of the board of directors of the Guarantor; or
• the Guarantor is designated as an “unrestricted subsidiary” for purposes of the agreement covenants; or
• the Guarantor is no longer wholly owned by FDC subject to the value of all Guarantors released under this provision does not exceed (x) 10%
of FDC’s Consolidated EBITDA plus (y) the amount of investments permitted under the agreement in respect of non-guarantors.
The indentures governing all of the other guarantees described above provide for a Guarantor to be automatically and unconditionally released and
discharged from its guarantee obligations in certain circumstances, including upon the earliest to occur of:
• the sale, exchange or transfer of the subsidiary’s capital stock or all or substantially all of its assets;
• designation of the Guarantor as an “unrestricted subsidiary” for purposes of the indenture covenants;
• release or discharge of the Guarantor’s guarantee of certain other indebtedness; or
• legal defeasance or covenant defeasance of the indenture obligations when provision has been made for them to be fully satisfied.
During the first quarter of 2014, the Company corrected errors related to the presentation of cost allocations and interest on intercompany notes in the
Guarantor condensed consolidating financial statements related primarily to 2008 and 2009. The Company does not believe these errors were material. The
adjustments are limited to the guarantor footnote and do not affect any other reported amounts or disclosures in the Company’s consolidated financial
statements. Refer to Note 15 “Supplemental Guarantor Condensed Consolidating Financial Statements” in the Company’s Quarterly Report on Form 10-Q for
the quarter ended March 31, 2014 for more information.
During the third quarter of 2014, the senior secured loan facilities were amended and three subsidiaries were removed as guarantors. Although these changes
were not material and did not have an impact to the Company’s consolidated financial statements, the Company adjusted prior periods to align with the new
guarantor structure. These adjustments are limited to the guarantor footnote and do not affect any other reported amounts or disclosures in the Company’s
consolidated financial statements. Refer to Note 6 "Borrowings" of these Consolidated Financial Statements for additional information on the private
placement.
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