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Long-Term Debt

12 Months Ended

Dec. 31, 2012

11. Long-Term Debt

Long-term debt consisted of:


(in $ millions)	Maturity ⁽¹⁾	December 31, 2012		December 31, 2011
Secured debt
Senior Secured Credit Agreement
Term loans
Dollar denominated	August 2013		—		121
Euro denominated	August 2013		—		40
Dollar denominated	August 2015		1,064		1,067
Euro denominated	August 2015		284		279
“Tranche S”	August 2015		137		137
Revolver borrowings
Dollar denominated			20		35
2012 Secured Credit Agreement
Dollar denominated term loan	November 2015		171		—
Second Priority Secured Notes
Dollar denominated floating rate notes	December 2016		225		211
Unsecured debt
Senior Notes
Dollar denominated floating rate notes	September 2014		122		123
Euro denominated floating rate notes	September 2014		201		210
9 ⁷/₈% Dollar denominated notes	September 2014		429		443
9% Dollar denominated notes	March 2016		250		250
Senior Subordinated Notes
11 ⁷/₈% Dollar denominated notes	September 2016		247		247
10 ⁷/₈% Euro denominated notes	September 2016		184		181
Capital leases			96		63

Total debt			3,430		3,407
Less: current portion			38		50

Long-term debt			3,392		3,357

(1)	The term loans maturing in August 2015 and November 2015 are subject to a reduction in maturity to May 2014 and August 2014, respectively, if the Company is unable to repay or refinance its senior notes due in September 2014 by May 2014.

Secured Debt

2012

On December 11, 2012, the Company amended and restated its existing Senior Secured Credit Agreement pursuant to the Fifth Amended and Restated Credit Agreement which, among other things, (i) added additional guarantees and collateral from subsidiaries previously excluded from the collateral and guarantee requirements under the Senior Secured Credit Agreement, (ii) amended intercompany transaction restrictions and (iii) increased the interest rate payable to lenders by 25 basis points. In addition, at a future date and upon an additional increase of 50 basis points in the interest rate payable to lenders under the Senior Secured Credit Agreement, the Fifth Amendment and Restated Agreement (i) permits the Company to issue additional junior secured debt; (ii) amends the change of control definition to permit holders of the Company’s Senior Notes, Senior Subordinated Notes and Second Priority Secured Notes, and holders of term loans issued by the Company’s direct parent holding company, Travelport Holdings Limited to acquire voting stock of Travelport Limited or any of its direct or indirect parents without triggering an event of default under the First Lien Credit Agreement and (iii) amends certain existing covenants. The amendments to the covenants include, but are not limited to: (a) a decrease in the minimum liquidity covenant to $45 million starting on September 30, 2013, (b) a delay in step-downs in the total leverage ratio covenant by four quarters commencing with the quarter ending September 30, 2013, (c) an increase in the general basket for investments to $35 million, and (d) permits the Company to refinance the Second Priority Secured Notes which carry payment-in-kind interest with new junior secured indebtedness that pays cash interest.

The Company accounted for the amendment and restatement as a modification of debt.

As a result of the Fifth Amended and Restated Credit Agreement, (i) the interest rates on the Company’s euro and dollar denominated term loans due August 2015 increased from EURIBOR plus 4.5% and USLIBOR plus 4.5%, respectively to EURIBOR plus 4.75% and US LIBOR plus 4.75% respectively, (ii) the interest rates on the dollar denominated “Tranche S” term loans increased from USLIBOR plus 4.5% to USLIBOR plus 4.75%.

On May 8, 2012, the Company entered into a credit agreement (the “2012 Secured Credit Agreement”) which (i) allowed for $175 million of new term loans issued at a discount of 3%, secured on a junior priority basis to the term loans under the Senior Secured Credit Agreement and on a senior priority basis to the Second Priority Secured Notes; (ii) carries interest at USLIBOR plus 9.5% with a minimum USLIBOR floor of 1.5%, payable quarterly; and (iii) added a senior secured leverage ratio test, initially set at 4.95 until December 31, 2012.

Proceeds from the term loans under 2012 Secured Credit Agreement were used to repay in full $41 million of euro denominated terms loans due August 2013, $121 million of dollar denominated term loans due August 2013 and $3 million of dollar denominated term loans due August 2015.

Foreign exchange fluctuations resulted in a $6 million increase in the principal amount of secured euro denominated long term loans during the year ended December 31, 2012.

During the year ended December 31, 2012, $14 million of interest was capitalized into the Second Priority Secured Notes.

As of December 31, 2011, the Company had capacity to borrow $181 million under the revolving credit facility of the Senior Secured Credit Agreement. On May 8, 2012, the Company entered into a revolving credit loan modification agreement relating to the Senior Secured Credit Agreement that, among other things, extended the maturity date of $61 million of the revolving loans under the Senior Secured Credit Agreement to May 24, 2015. In August 2012, the Company entered into a separate agreement relating to $62 million of revolving credit facility loan set to expire in August 2012 that assigned the commitments to a Travelport subsidiary and extended the maturity date to August 2013. The remaining $57 million of capacity under the revolving credit facility remains unchanged and is due to expire in August 2013.

During the year ended December 31, 2012, the Company borrowed $80 million and repaid $95 million under the revolving credit facility. At December 31, 2012, the Company has outstanding borrowings to external lenders of $20 million under the revolving credit facility, with remaining external borrowing capacity of $98 million.

The interest rate on the revolving loans increased from LIBOR plus 4.5% to LIBOR plus 4.75% pursuant to Fifth Amended and Restated Credit Agreement. The commitment fee on the revolving loans remains at 300 basis point as at December 31, 2012.

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, 2012, the Company had approximately $118 million of commitments outstanding under its cash collateralized letter of credit facility and $11 million of commitments outstanding under its synthetic letter of credit facility. The commitments under these two facilities included approximately $72 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, 2012, the Company had $17 million of remaining capacity under its letter of credit facilities.

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.

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 Senior Secured 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 Travelport Holdings Limited. On October 3, 2011, Travelport Holdings Limited 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 was 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.

In December 2011, the Company borrowed $35 million under its revolving credit facility, which was repaid in January 2012.

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.

2012

During the year ended December 31, 2012, the Company repurchased $14 million of 9⁷/₈% dollar denominated Senior Notes, $11 million of euro denominated floating rate Senior Notes and $1 million of dollar denominated floating rate Senior Notes for $20 million of cash, resulting in a gain of $6 million.

Foreign exchange fluctuations resulted in a $5 million increase in the principal amount of unsecured euro denominated long term debt during the year ended December 31, 2012.

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.

Capital Leases

During 2012, the Company repaid $16 million under its capital lease obligations, terminated $14 million of capital leases and entered into $63 million of new capital leases for information technology assets. During 2011, the Company repaid $14 million under its capital lease obligations and entered into $28 million of capital leases.

Debt Maturities

Aggregate maturities of debt as of December 31, 2012 are as follows:


(in $ millions)
2013			38
2014			772
2015⁽¹⁾			1,672
2016			920
2017			15
Thereafter			13

			3,430

(1)	Of the $1,672 million debt maturing in the year ending December 31, 2015, $1,485 million is subject to a reduction in maturity to May 2014 and $171 million is subject to a reduction in maturity to August 2014, under certain circumstances.

Debt Finance 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, 2012			Year Ended December 31, 2011			Year Ended December 31, 2010
Balance as of January, 1 2012		98			37			42
Capitalization of debt finance costs		13			84			12
Amortization		(37	)		(23	)		(17	)

Balance as of December, 31 2012		74			98			37

Amortization of debt finance costs during 2012 includes $5 million of debt finance costs written off due to early repayment of term loans in May 2012.

In December 2012, the Company also incurred $7 million of debt finance costs which were recorded directly in the consolidated statement of operations in connection with Fifth Amended and Restated Credit Agreement.

In September 2011, the Company 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 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, 2012 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. Under the 2012 Secured Credit Agreement, the Company is required to operate within a maximum senior secured leverage ratio at the end of every fiscal quarter. The Senior Secured Credit Agreement, the 2012 Secured Credit Agreement and Indentures also contain certain customary affirmative covenants and events of default. As of December 31, 2012, the Company was in compliance with all restrictive and financial covenants related to its long-term debt.