Visa 2008 Annual Report Download - page 139

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2008
(in millions, except as noted)
The estimated fair value of the Company's debt at September 30, 2008 and September 30, 2007 is $115 million and $42 million, respectively. The fair
value of the debt is estimated based on credit ratings for similar notes.
2002 Senior Secured Notes
In December 2002, Visa U.S.A. issued $200 million in series A and B senior secured notes with maturity dates of five and ten years. The notes are
collateralized by the Company's Colorado facility, which consists of two data centers and an office building, in addition to processing assets and developed
software. These assets are included in property, equipment, and technology, net and have a net carrying value of $131 million and $132 million at
September 30, 2008 and September 30, 2007, respectively. The series A senior secured notes were fully paid in December 2007.
As a result of the American Express settlement described in Note 23—Legal Matters, Visa U.S.A. was in default of certain financial performance
covenants on its series B senior secured notes and the debt was classified as a current liability at September 30, 2007. In May 2008, Visa U.S.A. and Visa Inc.
executed an Amended and Restated Note Purchase Agreement curing the default in connection with the series B senior secured notes. The remaining
obligation under the notes was guaranteed by Visa Inc. and previous financial covenants were eliminated. The notes continue to bear interest at 5.60% per
annum. The interest rate will be adjusted upward if the long-term senior unsecured debt rating of Visa Inc. falls below certain stipulated levels.
Medium-term Notes
Visa International established a medium-term note program in 1992 to offer up to $250 million of unsecured private placement notes. The notes may be
issued with maturities from nine months to thirty years at fixed or floating interest rates. In September 2008, Visa Inc. and Visa International executed a First
Amendment to Issuing and Paying Agent Agreement ("First Amendment") that guarantees the remaining obligations under the agreement by Visa Inc. The
interest terms remained unchanged.
Secured Notes Series B -1994 Lease Agreement
In September 1994, a real estate partnership owned jointly by Visa U.S.A. and Visa International issued notes that are secured by certain office
properties and facilities in California which are used by the Company through a lease financing of net-leased office space ("1994 Lease Agreement"). Series B
of these notes, totaling $26 million, were issued with an interest rate of 8.28% and a stated maturity of September 23, 2014, and are payable monthly with
interest-only payments for the first ten years and payments of interest and principal for the remainder of the term. Series B debt issuance costs of $0.5 million
are being amortized on a straight-line basis over the life of the notes.
As a result of the American Express settlement, described in Note 23—Legal Matters, the partnership was in default of certain performance covenants
under the terms of the 1994 Lease Agreement, and the related debt was classified as a current liability at September 30, 2007. In May 2008, Visa Inc., Visa
U.S.A. and Visa International executed an Amendment and Waiver to the 1994 Lease Agreement ("Amended 1994 Lease Agreement") curing the default. The
remaining obligations under the Amended 1994 Lease Agreement are guaranteed by Visa Inc., and continue to bear interest at 8.28% per annum. The interest
rate will be adjusted upward if the long-term senior unsecured debt rating of Visa Inc. falls below certain stipulated levels.
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