Starwood 2009 Annual Report Download - page 155

the type of loan borrowed. The margin increases range from 2.00% to 3.50% for term loans maintained as
Eurodollar Loans, 1.75% to 3.00% for revolving loans maintained as Euro Rate Loans, and 0.00% to 1.50% for Base
Rate and Canadian Prime Rate Loans. The applicable margin for the Facility Fee ranges from 0.25% to 0.50%. The
amendment further modifies the Amended Credit Facilities by (i.) restricting the Company’s ability to pay
dividends and repurchase stock depending on the Company’s free cash flow and Consolidated Leverage Ratio and
(ii.) decreasing the Company’s permitted lien basket from 10% of Net Tangible Assets (as defined in the Amended
Credit Facilities) to 5% of Net Tangible Assets. An amendment fee of 50 basis points was also paid to all consenting
lenders who approved the Amended Credit Facilities, with no amendment fee being paid on the repaid portion of the
term loan.
On May 23, 2008,the Company completed a public offering of $600 million of senior notes, consisting of
$200 million aggregate principal amount 6.25% Senior Notes (“6.25% Notes”) due February 15, 2013 and
$400 million aggregate principal amount 6.75% Senior Notes (“6.75% Notes”) due May 15, 2018 (collectively, the
“Notes”). The Company received net proceeds of approximately $596 million, which were used to reduce the
outstanding borrowings under its Revolving Credit Facilities. Interest on the 6.25% Notes is payable semi-annually
on February 15 and August 15 and interest on the 6.75% Notes is payable semi-annually on May 15 and
November 15. The Company may redeem all or a portion of the Notes at any time at the Company’s option at a price
equal to the greater of (1) 100% of the aggregate principal plus accrued and unpaid interest and (2) the sum of the
present values of the remaining scheduled payments of principal and interest discounted at the redemption rate on a
semi-annual basis at the Treasury rate plus 35 basis points for the 6.25% Notes and 45 basis points for the
6.75% Notes, plus accrued and unpaid interest. The Notes rank parri passu with all other unsecured and
unsubordinated obligations. Upon a change in control of the Company, the holders of the Notes will have the
right to require repurchase of the respective Notes at 101% of the principal amount plus accrued and unpaid interest.
Certain covenants on the Notes include restrictions on liens, sale and leaseback transactions, mergers, consoli-
dations and sale of assets.
Note 16. Other Liabilities
Other liabilities consisted of the following (in millions):
2009 2008
December 31,
Deferred gains on asset sales ....................................... $1,009 $1,069
SPG point liability
(a)
.............................................. 634 430
Deferred income including VOI and residential sales ...................... 33 55
Benefit plan liabilities............................................. 65 106
Insurance reserves ............................................... 46 50
Other . . ....................................................... 116 133
$1,903 $1,843
(a) Includes the actuarially determined liability related to the SPG program and the liability associated with the
American Express transaction discussed below.
In June 2009, the Company entered into an amendment to its existing co-branded credit card agreement
(“Amendment”) with American Express and extended the term of its co-branding agreement to June 15, 2015. In
connection with the Amendment in July 2009, the Company received $250 million in cash and, in return, sold SPG
points to American Express. In accordance with ASC 470, Debt, the Company has recorded the sale of these points
as a financing arrangement with an implicit interest rate of 4.5%. The liability associated with this financing
arrangement will be reduced ratably over a five year period beginning in October 2009. In accordance with the terms
of the Amendment, if the Company fails to comply with certain financial covenants the Company would have to
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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)