TEXT-Fitch rates First Data Corp proposed notes 'CCC+/RR6'

Wed Jan 30, 2013 10:57am EST

Jan 30 - Fitch Ratings has assigned a 'CCC+/RR6' rating to First Data
Corp.'s (FDC) proposed offering of $785 million in senior unsecured notes due
2021. Proceeds from the offering will be used to finance the company's tender
offer for its 10.55% senior unsecured notes due 2015. In addition, FDC is
seeking an addition to its 2018 senior secured term loan, rated 'BB-/RR2', to
refinance its remaining $255 million in senior secured term loans due 2014. Upon
successful completion of these transactions, FDC will have only its $784 million
in senior unsecured notes due 2015 maturing within the next three years-plus.

Fitch continues to rate FDC's Issuer Default Rating (IDR) at 'B' with a Stable
Outlook. Fitch revised FDC's Outlook to Stable from Negative earlier in January
based on improved operating results during 2012 as well as the extension and
refinancing of a significant majority of the company's previously forthcoming
term loan maturities in 2014. For a more detailed rationale behind the rating
action, please see the press release dated Jan. 8, 2013.

Liquidity as of Dec. 31, 2012 was solid with cash of $608 million ($324 million
of which was available to the company in the U.S.) and approximately $1.5
billion available under a $1.52 billion senior unsecured revolving credit
facility, approximately $500 million of which expires September 2014 and the
rest expiring September 2016. Fitch estimates that FDC generated approximately
$136 million in free cash flow over the latest 12 month period which further
adds to liquidity.

Total debt as of Dec. 31, 2012 was $23 billion, which includes approximately
$15.6 billion in secured debt, $4.5 billion in unsecured debt and $2.5 billion
in subordinated debt (all figures approximate). In addition, a subsidiary of New
Omaha Holdings L.P. (the direct parent company of First Data Corp.) has
outstanding $1.75 billion senior unsecured PIK notes due 2016. These notes are
not obligations of FDC and are not consolidated.

For an in-depth review of Fitch's credit analysis and outlook for FDC, please
see the report published June 6, 2012.

Fitch currently rates FDC as follows:

--Long-term IDR at 'B';
--$499 million senior secured revolving credit facility expiring September 2013
at 'BB-/RR2';
--$1 billion senior secured revolving credit facility expiring September 2016 at
'BB-/RR2';
--$255 million senior secured term loan B due 2014 at 'BB-/RR2';
--$2.7 billion senior secured term loan B due 2017 at 'BB-/RR2';
--$4.7 billion senior secured term loan B due 2018 at 'BB-/RR2';
--$750 million senior secured term loan B due 2018 at 'BB-/RR2';
--$1.6 billion 7.375% senior secured notes due 2019 at 'BB-/RR2';
--$510 million 8.875% senior secured notes due 2020 at 'BB-/RR2';
--$2.2 billion 6.75% senior secured notes due 2020 at 'BB-/RR2';
--$2 billion 8.25% junior secured notes due 2021 at 'CCC+/RR6';
--$1 billion 8.75%/10% PIK Toggle junior secured notes due 2022 at 'CCC+/RR6';
--$784 million 9.875% senior unsecured notes due 2015 at 'CCC+/RR6';
--$748 million 10.55% senior unsecured notes due 2015 at 'CCC+/RR6';
--$3 billion 12.625% senior unsecured notes due 2021 at 'CCC+/RR6';
--$2.5 billion 11.25% senior subordinated notes due 2016 at 'CCC/RR6'.

The Rating Outlook is Stable.

The Recovery Ratings (RRs) for FDC reflect Fitch's recovery expectations under a
distressed scenario, as well as Fitch's expectation that the enterprise value of
FDC, and hence recovery rates for its creditors, will be maximized in a
restructuring scenario (as a going concern) rather than a liquidation scenario.
In deriving a distressed enterprise value, Fitch applies a 15% discount to FDC's
estimated operating EBITDA (adjusted for equity earnings in affiliates) of
approximately $2.4 billion for the LTM ended Sept. 31, 2012, which is equivalent
to Fitch's estimate of FDC's total interest expense and maintenance capital
spending. Fitch then applies a 6x distressed EBITDA multiple, which considers
FDC's prior public trading multiple and that a stress event would likely lead to
multiple contraction. As is standard with Fitch's recovery analysis, the
revolver is fully drawn and cash balances fully depleted to reflect a stress
event. The 'RR2' for FDC's secured bank facility and senior secured notes
reflects Fitch's belief that 71%-90% recovery is realistic. The 'RR6' for FDC's
second lien, senior and subordinated notes reflects Fitch's belief that 0%-10%
recovery is realistic. The 'CCC/RR6' rating for the subordinated notes reflects
the minimal recovery prospects and inherent subordination in a recovery
scenario.

SENSITIVITY/RATING DRIVERS

WHAT COULD TRIGGER A RATING ACTION

Future developments that may, individually or collectively, lead to positive
rating action include:

--Greater visibility and confidence in the potential for the company to access
the public equity markets.

Future developments that may, individually or collectively, lead to negative
rating action include:

--The ratings could be downgraded if FDC were to experience sustained market
share declines or if typical price compression accelerates.
--The ratings could also be downgraded if the U.S. economy were to experience a
sustained recession.


Additional information is available at 'www.fitchratings.com'. The ratings above
were unsolicited and have been provided by Fitch as a service to investors.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology', dated Aug. 8, 2012;
--'Evaluating Corporate Governance', dated Dec. 12, 2012;
--'Rating Technology Companies', dated Aug. 9, 2012.

Applicable Criteria and Related Research:
Corporate Rating Methodology
Evaluating Corporate Governance
Rating Technology Companies
U.S. Leveraged Finance Spotlight -- First Data Corporation
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