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Long-Term Debt

12 Months Ended

Dec. 31, 2011

12. Long-Term Debt

Long-term debt consisted of:


(in $ millions)	Maturity	December 31, 2011		December 31, 2010

Secured debt
Senior secured credit agreement
Term loans
Dollar denominated	August 2013		121		172
Euro denominated	August 2013		40		59
Dollar denominated	August 2015		1,067		1,520
Euro denominated	August 2015		279		410
“Tranche S”	August 2015		137		137
Revolver borrowings
Dollar denominated			35		—
Second priority secured notes
Dollar denominated floating rate notes	December 2016		211		—
Unsecured debt
Senior notes
Dollar denominated floating rate notes	September 2014		123		123
Euro denominated floating rate notes	September 2014		210		217
9⁷ /₈% Dollar denominated notes	September 2014		443		443
9% Dollar denominated notes	March 2016		250		250
Senior subordinated notes
11⁷ /₈% Dollar denominated notes	September 2016		247		247
10⁷ /₈% Euro denominated notes	September 2016		181		187
Capital leases and other			63		49

Total debt			3,407		3,814
Less: current portion			50		18

Long-term debt			3,357		3,796

Secured Debt

2011

On September 30, 2011, the Company amended its existing senior secured credit agreement pursuant to the Fourth Amended and Restated Credit Agreement. The Fourth Amended and Restated Credit Agreement, among other things: (i) allowed for new second lien term loans secured on a second priority basis as described further below; (ii) added a minimum liquidity covenant to be effective under certain conditions; (iii) increased the restricted payment capacity; (iv) limits the general basket for investments to $20 million; (v) provided for the payment of a consent fee to various lenders; (vi) requires the Company to purchase and retire up to $20 million of its senior notes under certain conditions for each of the next two years; and (vii) amended the Company’s total leverage ratio test, which is initially set at 8.0 until June 30, 2013, and added a first lien leverage ratio test, which is initially set at 4.0 until June 30, 2013.

The interest rates on the Company’s euro and dollar denominated term loans due August 2015 remains at EURIBOR plus 4.5% and USLIBOR plus 4.5%, respectively. The interest rates on the Company’s euro and dollar denominated term loans due August 2013 remains at EURIBOR plus 2.5% and USLIBOR plus 2.5%, respectively. The dollar denominated “Tranche S” term loans bear interest at USLIBOR plus 4.5%.

On September 30, 2011, the Company entered into a second lien credit agreement (the “Second Lien Credit Agreement”) which: (i) allowed for new term loans in an aggregate principal amount of $342.5 million; (ii) has a maturity date of December 1, 2016; (iii) carries an interest rate equal to LIBOR plus 6%, payable in cash (only when permitted by the terms of the Fourth Amended and Restated Credit Agreement) or payment-in-kind interest on a cumulative quarterly basis; (iv) is guaranteed, on a secured second priority basis, by the same entities that guarantee the obligations under the senior secured credit agreement; (v) has substantially the same covenants and events of default as under the senior secured credit agreement, with certain exceptions; and (vi) may, under certain conditions, be converted into newly issued private-for-life bonds (the “Second Priority Secured Notes”) to be governed by an indenture that contains substantially the same terms, guarantees, covenants, events of default and remedies as the Second Lien Credit Agreement (the “Bond Conversion”).

On September 30, 2011, the Company issued and distributed $207.5 million of term loans under the Second Lien Credit Agreement to its direct parent company, Travelport Holdings Limited (“Holdings”). On October 3, 2011, Holdings exchanged these second lien term loans as consideration to purchase $207.6 million of its unsecured payment-in-kind (“PIK”) term loans at par.

On November 30, 2011, the Company completed the Bond Conversion and the Second Lien Credit Agreement terminated. During 2011, $3 million of interest was capitalized into the Second Priority Secured Notes.

In May 2011, proceeds from the sale of the GTA business, together with existing cash, were used to make a $655 million early repayment of term loans outstanding under the senior secured credit agreement, consisting of $19 million of euro denominated term loans due August 2013, $135 million of euro denominated term loans due August 2015, $51 million of dollar denominated term loans due August 2013 and $450 million of dollar denominated term loans due August 2015. Due to these early repayments, the Company is no longer required to repay quarterly installments equal to 1% per annum of the original funded principal amount.

During the year ended December 31, 2011, the Company repaid approximately $3 million of dollar denominated debt under its senior secured credit agreement. Additionally, during 2011 the principal amount outstanding under the euro denominated term loan facility increased by approximately $4 million as a result of foreign exchange fluctuations. This increase was fully offset by movements in foreign exchange hedge instruments contracted by the Company.

On October 6, 2011, the Company entered into a revolving credit loan modification agreement related to the Fourth Amended and Restated Credit Agreement, pursuant to which its revolving credit facility reduced from $270 million to $181 million. Furthermore, as a result of this agreement, among other things, (i) the maturity date for $118 million of the revolving credit facility was extended to August 23, 2013; (ii) the interest rate on such extended revolving loans increased from LIBOR plus 2.75% to LIBOR plus 4.50%; and (iii) the commitment fee on such extended revolving loans increased from 50 basis points to 300 basis points. Capacity under the revolving credit facility will be reduced to $118 million in August 2012.

In December 2011, the Company borrowed $35 million under its revolving credit facility, which has been repaid in January 2012. As of December 31, 2011, the remaining capacity under the revolving credit facility was $146 million.

The Company has a $133 million letter of credit facility which matures in August 2015 and which is collateralized by $137 million of restricted cash. The Company also has a $13 million synthetic letter of credit facility which matures in August 2013. As of December 31, 2011, the Company had approximately $103 million of commitments outstanding under its cash collateralized letter of credit facility and $10 million of commitments outstanding under its synthetic letter of credit facility. The commitments under these two facilities included approximately $75 million in letters of credit issued by the Company on behalf of Orbitz Worldwide, pursuant to the Company’s separation agreement with Orbitz Worldwide. As of December 31, 2011, the Company had $33 million of remaining capacity under its letter of credit facilities.

2010

In October 2010, the Company entered into an agreement to amend certain terms under its senior secured credit agreement. The main impact of amendments made in 2010 was to (i) extend the maturities for $1,523 million of dollar denominated term loans, $427 million of euro denominated term loans and $137 million of the synthetic letter of credit commitments by two years to August 2015, subject to a reduction in those maturities to May 2014 under certain circumstances; (ii) provide cash collateral for existing and future letters of credit issued under the extended letter of credit commitments by establishing $137 million of new dollar denominated “Tranche S” term loans, which were funded to the Company with proceeds in a restricted deposit account, leaving $13 million total capacity in the original synthetic letter of credit facility; (iii) amend the total leverage ratio test within the covenant conditions, beginning December 31, 2010 (subsequently further amended in September 2011, as discussed above); (iv) provide the flexibility to extend the maturity on the revolving credit facility with the consent of the revolving credit facility lenders at a later date; (v) provide the ability to incur certain additional junior refinancing indebtedness; and (vi) bring into effect several technical and conforming changes. The amendment also increased the interest rate margin on extended euro and dollar denominated term loans by 2.0% to EURIBOR plus 4.5% and USLIBOR plus 4.5%, respectively. The remaining amounts outstanding under the term loan facility and the synthetic letter of credit facility mature in August 2013. The interest rate margin on non-extended euro and dollar denominated borrowings under the term loan facility remained at EURIBOR plus 2.5% and USLIBOR plus 2.5%, respectively.

During 2010, the Company repaid $11 million of dollar denominated term loans, as required.

In August 2010, the Company made a discretionary repayment of $149 million principal amount of dollar denominated terms loans under its senior secured credit agreement, using proceeds from the issuance of $250 million of 9% dollar denominated senior notes due March 2016. As a result of this repayment, the Company amortized an additional $5 million of discount which had been recorded upon the original issuance of that debt.

During 2010, the principal amount outstanding under the euro denominated term loan facility decreased by approximately $32 million as a result of foreign exchange fluctuations. This decrease was fully offset by movements in foreign exchange hedge instruments contracted by the Company.

During the year ended December 31, 2010, the Company borrowed and subsequently repaid $130 million of debt under its revolving credit facility.

In October 2010, the Company borrowed $137 million under new “Tranche S” term loans to fund the cash collateralization of the $133 million cash collateralized letter of credit facility.

Unsecured Debt

The Company’s senior notes are unsecured senior obligations of the Company and are subordinated to all existing and future secured indebtedness of the Company but will be senior in right of payment to any existing and future subordinated indebtedness. The Company’s dollar denominated floating rate senior notes bear interest at a rate equal to USLIBOR plus 4⁵/8 %. The Company’s euro denominated floating rate senior notes bear interest at a rate equal to EURIBOR plus 4⁵/8%.

The Company’s senior subordinated notes are unsecured senior subordinated obligations of the Company and are subordinated in right of payment to all existing and future senior indebtedness and secured indebtedness of the Company.

2011

During 2011, the principal amount of euro denominated notes decreased by approximately $13 million as a result of foreign exchange fluctuations. This foreign exchange gain was largely offset through foreign exchange hedge instruments contracted by the Company.

2010

In December 2010, the Company repurchased $20 million principal amount of its dollar denominated senior floating rate notes, resulting in a $2 million gain from early extinguishment of debt.

In August 2010, the Company issued $250 million of 9% dollar denominated senior notes. These notes mature on March 1, 2016. All of the other key terms and conditions of these notes, and the guarantor entities, are the same as those for the Company’s other senior notes. The Company used part of these proceeds to make a repayment of $149 million principal amount of dollar denominated term loans under its senior secured credit agreement.

During 2010, the principal amount of euro denominated notes decreased by approximately $29 million as a result of foreign exchange fluctuations. This foreign exchange gain was largely offset through foreign exchange hedge instruments contracted by the Company and net investment hedging strategies. The unrealized impacts of the hedge instruments are recorded within other current assets, other non-current assets, accrued expenses and other current liabilities, and other non-current liabilities on the Company’s consolidated balance sheet.

Capital Leases

During 2011, the Company repaid $14 million under its capital lease obligations and entered into additional capital lease obligations of $28 million. During 2010, the Company repaid $10 million under its capital lease obligations, terminated $21 million of capital leases and entered into $30 million of new capital leases.

Debt Maturities

Aggregate maturities of debt as of December 31, 2011 are as follows:


(in $ millions)
2012			50
2013			174
2014			790
2015^(a)			1,487
2016			891
Thereafter			15

			3,407

(a)	Of the $1,487 million debt maturing in the twelve month period ending December 31, 2015, $1,483 million is subject to a reduction in maturity to May 2014 under certain circumstances.

Debt Issuance Costs

Debt issuance costs are capitalized within other non-current assets on the consolidated balance sheets and amortized over the term of the related debt into earnings as part of interest expense in the consolidated statements of operations. The movement in deferred financing costs is summarized below:


(in $ millions)	Year Ended December 31, 2011			Year Ended December 31, 2010			Year Ended December 31, 2009

Deferred financing costs at beginning of year		37			42			55
Capitalization of debt finance costs		84			12			3
Amortization		(23	)		(17	)		(16	)

Deferred financing costs at end of year		98			37			42

In September 2011, the Company also incurred $16 million of debt finance costs which were recorded directly in the consolidated statement of operations in connection with the credit agreement amendments and the second lien debt.

During 2010, the Company amortized $6 million of debt discount, which included an additional $5 million due to discretionary repayment of the dollar denominated term loans upon which the discount was originally recorded. In addition, during 2010, the Company paid $8 million of financing costs which were recorded directly in the consolidated statement of operations in connection with an amendment to the Company’s senior secured credit agreement.

Debt Covenants and Guarantees

The Company’s senior secured credit agreement and the indentures contain a number of covenants that, among other things, restrict, subject to certain exceptions, the Company’s ability to: incur additional indebtedness or issue preferred stock; create liens on assets; enter into sale and leaseback transactions; engage in mergers or consolidations; sell assets; pay dividends and distributions or repurchase capital stock; make investments, loans or advances; repay subordinated indebtedness (including the Company’s senior subordinated notes); make certain acquisitions; engage in certain transactions with affiliates; amend material agreements governing the Company’s subordinated indebtedness (including the Company’s senior subordinated notes); change the Company’s lines of business; and change the status of the Company as a passive holding company.

In addition, under the senior secured credit agreement, the Company is required to operate within a maximum total leverage ratio and a first lien leverage ratio, and to maintain a minimum cash balance at the end of every fiscal quarter. The senior secured credit agreement and indentures also contain certain customary affirmative covenants and events of default. As of December 31, 2011, the Company was in compliance with all restrictive and financial covenants related to its long-term debt.

The Company’s long-term debt is guaranteed by the Company’s subsidiaries incorporated in the US with certain exceptions.