Fitch Affirms First Data at 'A/F1'; Off Rating Watch Negative.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has affirmed and removed First Data Corp. (First Data) from Rating Watch Negative following the completed spin-off of The Western Union Company (Western Union; rated 'BBB+' with a Stable Outlook by Fitch) from First Data on Sept. 29, 2006: The affirmed ratings are as follows: --Issuer Default Rating (IDR IDR In currencies, this is the abbreviation for the Indonesian Rupiah. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) 'A'; --Senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. 'A'; --Senior credit facility 'A'; --Commercial paper (CP) 'F1'. The Rating Outlook is Stable. The ratings reflect First Data's conservative capital structure, solid credit protection measures, and leading market position in merchant transactions and third-party processing of credit cards, which are both expected to enable the company to maintain strong and consistent free cash flow generation and a conservative financial profile. Fitch expects no significant changes to the key elements of First Data's existing financial policies, strategic plan, or management as a result of the Western Union spin-off. A major component of First Data's strategy is to generate recurring revenue by developing long-term contractual relationships with clients who have decided to outsource various transaction and informational processing services. Due to First Data's significant size and market position, Fitch expects that the company will continue to benefit from economies of scale. First Data's growth strategy has historically been focused on a combination of acquisitions and organic growth, and Fitch believes this will continue to be the case. Credit concerns will center on strong competition for First Data's credit card processing business, the potential for further customer consolidation, and competitive pricing pressures in the credit card and transaction processing Updating the appropriate database records as soon as a transaction (order, payment, etc.) is entered into the computer. It may also imply that confirmations are sent at the same time. Transaction processing systems are the backbone of an organization because they update constantly. industries. First Data will have relatively higher competitive risks associated with the Financial Institution Services segment and will maintain a continued commitment to further enhance shareholder value. Fitch believes First Data will reduce debt to approximately $2.1 billion within several months after the Sept. 29, 2006 spin-off of Western Union, compared with approximately $4.6 billion immediately after the spin-off. First Data's debt reduction will be funded with the $2.5 billion cash dividend the company received from Western Union in conjunction with the spin-off. Solid liquidity should continue to be supported by a $1.5 billion undrawn un·draw tr.v. un·drew , un·drawn , un·draw·ing, un·draws To draw to one side, as a curtain. Adj. 1. undrawn - not represented in a drawing undelineated - not represented accurately or precisely revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility expiring Oct. 24, 2010 (supporting the company's $1.5 billion CP program) and a cash balance of approximately $600 million-$700 million subsequent to the conclusion of First Data's proposed $2.5 billion debt reduction plan. Furthermore, Fitch estimates strong annual free cash flow in excess of $1 billion. First Data will continue to prioritize its use of cash flow for debt service, re-investment for growth in the business and working capital needs, acquisitions, stock repurchases Stock repurchase A firm's repurchase of outstanding shares of its common stock. and cash dividends. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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