Orbitz 2009 Annual Report Download - page 57

Financing Arrangements
On July 25, 2007, concurrent with the IPO, we entered into a $685 million senior secured credit
agreement (“Credit Agreement”) consisting of a seven-year $600 million term loan facility (“Term Loan”) and
a six-year $85 million revolving credit facility (“Revolver”). The Term Loan and the Revolver bear interest at
variable rates, at our option, of LIBOR or an alternative base rate plus a margin. At December 31, 2008 and
December 31, 2007, $593 million and $599 million was outstanding on the Term Loan, respectively, and
$21 million and $1 million was outstanding on the Revolver, respectively.
As described above, in connection with LCPI filing for bankruptcy protection, total availability under our
Revolver has effectively been reduced from $85 million to $72.5 million.
Our Term Loan and Revolver are both secured by substantially all of our and our domestic subsidiaries’
tangible and intangible assets, including a pledge of 100% of the outstanding capital stock or other equity
interests of substantially all of our direct and indirect domestic subsidiaries and 65% of the capital stock or
other equity interests of certain of our foreign subsidiaries, subject to certain exceptions. Our Term Loan and
Revolver are also guaranteed by substantially all of our domestic subsidiaries.
The Credit Agreement contains various customary restrictive covenants that limit our and our subsidiaries’
ability to, among other things:
• incur additional indebtedness or guarantees;
• enter into sale or leaseback transactions;
• make investments, loans or acquisitions;
• grant or incur liens on our assets;
• sell our assets;
• engage in mergers, consolidations, liquidations or dissolutions;
• engage in transactions with affiliates; and
• make restricted payments.
The Credit Agreement requires us not to exceed a maximum total leverage ratio, which declines over the
term of the agreement, and to maintain a minimum fixed charge coverage ratio, each as defined in the Credit
Agreement. If we fail to comply with these covenants and we are unable to obtain a waiver or amendment,
our lenders could accelerate the maturity of all amounts borrowed under our term loan and revolving credit
facility and could proceed against the collateral securing this indebtedness. We are permitted, however, to cure
any such failure by issuing equity to certain permitted holders, as defined in the Credit Agreement, which
include The Blackstone Group and certain of its affiliates. The amount of the net cash proceeds received from
this equity issuance would then be applied to increase consolidated EBITDA, as defined in the Credit
Agreement and on which the covenant calculations are based, for the applicable quarter. As of December 31,
2008, we were in compliance with these covenants.
In addition, beginning in the first quarter of 2009, we are required to make mandatory prepayments on
the Term Loan annually in an amount up to 50% of the prior year’s excess cash flow, as defined in the Credit
Agreement. Mandatory prepayments are applied, in order of maturity, to the scheduled quarterly term loan
principal payments. Based on our cash flow for the year ended December 31, 2008, we are not required to
make a mandatory prepayment in the first quarter of 2009. The potential amount of mandatory prepayments
that will be required beyond the first quarter of 2009 is not reasonably estimable as of December 31, 2008.
As a wholly owned subsidiary of Travelport, Travelport provided guarantees, letters of credit and surety
bonds on our behalf under our commercial agreements and leases and for the benefit of certain regulatory
agencies. Under the Separation Agreement, we are required to use commercially reasonable efforts to have
Travelport released from any then outstanding guarantees and surety bonds. Travelport no longer provides
surety bonds on our behalf or guarantees in connection with commercial agreements or leases entered into or
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