DXC Technology Co. Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by DXC Technology Company on March 15, 2019. The filing discloses the entry into a Material Definitive Agreement to secure financing for the acquisition of Luxoft Holding, Inc. and for general corporate purposes.
Key Financial Metrics and Debt Structure
The filing details a new Term Loan Credit Agreement establishing delayed-draw senior unsecured term loan A facilities. The agreement does not report revenue, profit, or cash flow metrics, as it is a transactional filing rather than a periodic financial report. The debt structure consists of three tranches:
- Tranche A-1: $500 million in U.S. dollars, maturing five years after the Funding Date.
- Tranche A-2: €750 million in Euros, maturing two years after the Funding Date.
- Tranche A-3: €750 million in Euros, maturing three years after the Funding Date.
Interest rates are variable, based on LIBOR or a base rate plus a margin tied to DXC's long-term debt rating. The initial commitments are available until October 7, 2019.
Material Changes and Terms
The primary material change is the creation of a direct financial obligation to fund the Luxoft merger. Key terms include:
- Expansion Option: DXC may increase commitments with lender consent by up to $200 million for Tranche A-1 and €500 million for Tranches A-2 and A-3.
- Maturity Extension: DXC may request once a year to extend the maturity date of Tranches A-2 and/or A-3 by one year.
- Condition Precedent: The Funding Date is conditioned on the Merger being consummated, or reasonably expected to be consummated, within three business days after the Funding Date.
Outlook, Risks, and Contingencies
The filing incorporates customary representations, warranties, covenants, and events of default consistent with DXC's existing Revolving Credit Agreement. Remedies for default include the acceleration of repayment. The administrative agent for the lenders is Bank of America, N.A. The filing does not provide specific management commentary on future revenue guidance or operational risks beyond the standard debt covenants.
Investor Verification Checklist
- Verify the final closing date of the Luxoft Holding, Inc. acquisition to confirm the Funding Date conditions are met.
- Review the full text of the Term Loan Credit Agreement (Exhibit 10.1) for specific financial covenants and default triggers.
- Monitor DXC's long-term debt rating, as it directly impacts the interest rate margin on the new facilities.
- Confirm whether the company exercises the option to increase loan commitments or extend maturity dates.