ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾

7. DEBT

ÌýÌýÌýÌýÌýÌýÌýÌýOutstanding debt consisted of the following (dollars in millions):

ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ Corporation

ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International

DIRECT AND SUBSIDIARY DEBT

ÌýÌýÌýÌýÌýÌýÌýÌýÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ Corporation's direct debt and guarantee obligations consist of a guarantee of certain indebtedness incurred from time to time to finance certain insurance premiums.

ÌýÌýÌýÌýÌýÌýÌýÌýSubstantially all of our other debt, including the facilities described below, has been incurred by our subsidiaries (primarily ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International); such subsidiary debt is nonrecourse to us and we have no contractual obligation to fund our subsidiaries' respective operations.

Senior Credit Facilities

ÌýÌýÌýÌýÌýÌýÌýÌýAs of JuneÌý30, 2012, our senior credit facilities ("Senior Credit Facilities") consisted of our revolving credit facility ("Revolving Facility"), our term loan B facility ("Term Loan B"), our extended term loan B facility ("Extended Term Loan B"), our extended term loan B facility—SeriesÌý2 ("Extended Term Loan B—SeriesÌý2") and our term loan C facility ("Term Loan C") as follows (dollars in millions):

ÌýÌýÌýÌýÌýÌýÌýÌýOur obligations under the Senior Credit Facilities are guaranteed by our guarantor subsidiaries ("Guarantors"), which consist of substantially all of our domestic subsidiaries and certain of our foreign subsidiaries, and are secured by a first priority lien on substantially all of our domestic property, plant and equipment, the stock of all of our material domestic subsidiaries and certain foreign subsidiaries and pledges of intercompany notes between certain of our subsidiaries.

ÌýÌýÌýÌýÌýÌýÌýÌýDuring the three months ended JuneÌý30, 2012, we paid the annual scheduled repayment of $3Ìýmillion on our Term Loan B, $7Ìýmillion on our Extended Term Loan B, and $4Ìýmillion on our Term Loan C.

Amendment to Credit Agreement

ÌýÌýÌýÌýÌýÌýÌýÌýOn MarchÌý6, 2012, ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International entered into a seventh amendment to its Senior Credit Facilities. Among other things, the amendment:

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  extended the stated termination date of the Revolving Facility commitments from MarchÌý9, 2014 to MarchÌý20, 2017;
  
  

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  reduced the applicable interest rate margin on the Revolving Facility commitments by 0.50%;
  
  

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  set the undrawn commitment fee on the Revolving Facility at 0.50%;
  
  

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  increased the capacity for the Revolving Facility commitments from $300Ìýmillion to $400Ìýmillion;
  
  

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  extended the stated maturity date of $346Ìýmillion aggregate principal amount of Term Loan B from AprilÌý19, 2014 to AprilÌý19, 2017 (now referred to as Extended Term Loan B—SeriesÌý2);
  
  

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  increased the interest rate margin with respect to Extended Term Loan B—SeriesÌý2 to LIBOR plus 3.00% (the interest rate margin is subject to a leverage-based step-down, which was achieved based on JuneÌý30, 2012 results);
  
  

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  set the amortization on the Extended Term Loan B—SeriesÌý2 at 1% of the principal amount, payable annually commencing on MarchÌý31, 2013; and
  
  

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  made certain other amendments to the Senior Credit Facilities.

Redemption of Notes and Loss on Early Extinguishment of Debt

ÌýÌýÌýÌýÌýÌýÌýÌýDuring the six months ended JuneÌý30, 2012 and 2011, we redeemed or repurchased the following notes (monetary amounts in millions):

Other Debt

ÌýÌýÌýÌýÌýÌýÌýÌýDuring the six months ended JuneÌý30, 2012, HPS repaid $2Ìýmillion and RMB 120Ìýmillion (approximately $19Ìýmillion) on term loans and working capital loans under its secured facilities. As of JuneÌý30, 2012, HPS had $10Ìýmillion and RMB 354Ìýmillion (approximately $56Ìýmillion) outstanding under their secured facilities. In connection with these payments, the lenders agreed to release our Company as a guarantor.

ÌýÌýÌýÌýÌýÌýÌýÌýDuring the six months ended JuneÌý30, 2012, HPS repaid RMB 109Ìýmillion (approximately $17Ìýmillion) under its loan facility for working capital loans and discounting of commercial drafts. As of JuneÌý30, 2012, HPS had RMB 390Ìýmillion (approximately $62Ìýmillion) outstanding, which is classified as current portion of debt on the accompanying condensed consolidated balance sheets (unaudited).

ÌýÌýÌýÌýÌýÌýÌýÌýOn MarchÌý30, 2012, we repaid the remaining A$26Ìýmillion (approximately $27Ìýmillion) outstanding under our Australian subsidiary credit facility ("Australian Credit Facility"), which represents repayment of A$14Ìýmillion (approximately $15Ìýmillion) under the revolving facility and A$12Ìýmillion (approximately $12Ìýmillion) under the term loan facility.

Note Payable from ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International to ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ Corporation

ÌýÌýÌýÌýÌýÌýÌýÌýAs of JuneÌý30, 2012, we have a loan of $619Ìýmillion to our subsidiary, ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International (the "Intercompany Note"). During the six months ended JuneÌý30, 2012, ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International borrowed $84Ìýmillion from us under the Intercompany Note. The Intercompany Note is unsecured and $100Ìýmillion of the outstanding amount is classified as current as of both JuneÌý30, 2012 and DecemberÌý31, 2011 on the condensed consolidated balance sheets (unaudited). As of JuneÌý30, 2012, under the terms of the Intercompany Note, ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International promises to pay us interest on the unpaid principal amount at a rate per annum based on the previous monthly average borrowing rate obtained under our U.S. accounts receivable securitization program ("U.S. A/R Program"), less ten basis points (provided that the rate shall not exceed an amount that is 25 basis points less than the monthly average borrowing rate obtained for the U.S. LIBOR-based borrowings under our Revolving Facility).

COMPLIANCE WITH COVENANTS

ÌýÌýÌýÌýÌýÌýÌýÌýWe believe that we are in compliance with the covenants contained in the agreements governing our material debt instruments, including our Senior Credit Facilities, our U.S. A/R Program and our European accounts receivable securitization program (the "EU A/R Program" and collectively with the U.S. A/R Program the "A/R Programs") and our notes.

ÌýÌýÌýÌýÌýÌýÌýÌýOur material financing arrangements contain certain covenants with which we must comply. A failure to comply with a covenant could result in a default under a financing arrangement if not waived or amended. A default under these material financing arrangements generally allows debt holders the option to declare the underlying debt obligations immediately due and payable.

ÌýÌýÌýÌýÌýÌýÌýÌýFurthermore, certain of our material financing arrangements contain cross default and cross acceleration provisions under which a failure to comply with the covenants in one financing arrangement may result in an event of default under another financing arrangement.

ÌýÌýÌýÌýÌýÌýÌýÌýOur Senior Credit Facilities are subject to a single financial covenant (the "Leverage Covenant") which applies only to the Revolving Facility and is tested at the ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International level. The Leverage Covenant is applicable only if borrowings, letters of credit or guarantees are outstanding under the Revolving Facility (cash collateralized letters of credit or guarantees are not deemed outstanding). The Leverage Covenant is a net senior secured leverage ratio covenant which requires that ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International's ratio of senior secured debt to EBITDA (as defined in the applicable agreement) is not more than 3.75 to 1.

ÌýÌýÌýÌýÌýÌýÌýÌýIf in the future ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International fails to comply with the Leverage Covenant, then we may not have access to liquidity under our Revolving Facility. If ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International failed to comply with the Leverage Covenant at a time when we had uncollateralized loans or letters of credit outstanding under the Revolving Facility, ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International would be in default under the Senior Credit Facilities, and, unless ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International obtained a waiver or forbearance with respect to such default (as to which we can provide no assurance), ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International could be required to pay off the balance of the Senior Credit Facilities in full, and we may not have further access to such facilities.

ÌýÌýÌýÌýÌýÌýÌýÌýThe agreements governing our A/R Programs also contain certain receivable performance metrics. Any material failure to meet the applicable A/R Programs' metrics in the future could lead to an early termination event under the A/R Programs, which could require us to cease our use of such facilities, prohibiting us from additional borrowings against our receivables or, at the discretion of the lenders, requiring that we repay the A/R Programs in full. An early termination event under the A/R Programs would also constitute an event of default under our Senior Credit Facilities, which could require us to pay off the balance of the Senior Credit Facilities in full and could result in the loss of our Senior Credit Facilities.