Business Context and Reporting Period
This Form 8-K filing by Fidelity National Information Services, Inc. (FIS) covers events occurring on May 29, 2019. The report details significant amendments to the company's credit facilities and the establishment of new commercial paper programs. These actions are primarily intended to support general corporate purposes and to backstop financing related to the proposed merger transaction with Worldpay, Inc.
Key Financial Metrics and Liquidity
The filing focuses on liquidity enhancements and debt capacity rather than operational performance metrics such as revenue or profit.
- Revolving Credit Facility: Increased by $1.5 billion to a total aggregate principal amount of $5.5 billion.
- Swing Line Subfacility: Established a new facility for same-day Euro borrowings up to the U.S. dollar equivalent of $4.735 billion.
- Future Incremental Capacity: Refreshed the ability to increase revolving credit commitments by up to an additional $1.5 billion.
- U.S. Commercial Paper Program: Capacity increased to $5.5 billion.
- Euro-Commercial Paper Program: Newly established with a maximum aggregate amount outstanding of $4.735 billion (or currency equivalent).
- EBITDA Calculation Adjustment: The cap on add-backs for cost savings and synergies in consolidated EBITDA calculations was increased from 15% to 20%, and the realization period was extended from 18 to 24 months.
Note: The filing text does not provide specific values for revenue, net income, operating margins, or total debt outstanding as of the reporting date.
Material Changes Versus Prior Period
The primary material changes reported are structural adjustments to the company's financing arrangements:
- Debt Capacity Expansion: Significant increases in both committed revolving credit and unsecured commercial paper issuance limits compared to prior arrangements.
- Currency Diversification: Introduction of Euro-denominated borrowing capabilities via a new swing line and a dedicated Euro-Commercial Paper program.
- Covenant Flexibility: Modification of the EBITDA calculation methodology to allow for a higher percentage of synergy add-backs and a longer realization window, providing greater financial flexibility during the integration of the Worldpay transaction.
Guidance, Outlook, Risks, and Contingencies
Management Commentary and Use of Proceeds: Proceeds from the new commercial paper programs are expected to fund costs associated with the Worldpay transaction and general corporate purposes. Borrowings under the amended credit agreement will backstop the commercial paper programs.
Risks and Contingencies: The filing includes extensive forward-looking statements and risk factors, including:
- Merger Risks: Potential failure to complete the Worldpay transaction, inability to achieve anticipated synergies, or integration difficulties.
- Market Risks: Disruptions in commercial paper markets, changes in interest rates, and currency fluctuations.
- Operational Risks: Cybersecurity breaches, data loss, customer attrition, and regulatory changes.
- Geographic Risks: Specific risks related to business operations in Brazil following the unwinding of the Brazilian Venture.
Unusual Items: The filing notes that the commercial paper notes are not registered under the Securities Act of 1933 and may not be offered in the U.S. absent registration or an applicable exemption.
Investor Verification Checklist
- Verify the final terms of the Third Amendment and Joinder Agreement (Exhibit 10.1) to confirm interest rate margins and specific covenants.
- Review the Joint Proxy Statement/Prospectus (Form S-4) filed on April 15, 2019, for detailed information on the Worldpay merger transaction and associated costs.
- Monitor the utilization rates of the new $5.5 billion U.S. and $4.735 billion Euro commercial paper programs to assess liquidity needs.
- Assess the impact of the EBITDA add-back adjustment (increased to 20% cap) on future leverage ratio compliance.
- Track regulatory approvals and potential delays regarding the Worldpay merger as referenced in the risk factors.