Business Context and Reporting Period
This Form 8-K filing by Fidelity National Information Services, Inc. (FIS) covers events occurring on March 29, 2019, and April 5, 2019, with the report filed on April 11, 2019. The filing details amendments to FIS's credit agreement to facilitate the previously announced acquisition of Worldpay, Inc. (Worldpay).
Key Financial Metrics and Debt Structure
The filing focuses on debt financing arrangements rather than operational financial results. Key figures include:
- Bridge Facility Reduction: Commitments under the 364-day senior unsecured bridge term loan facility were reduced from $9.5 billion to $7.5 billion.
- Revolving Loan Capacity: Amendments permit the borrowing of up to $2.0 billion of revolving loans on a limited conditionality basis.
- Permanent Financing Target: FIS intends to borrow approximately $11.1 billion in permanent financing (debt securities, commercial paper, and/or revolving credit) to fund the cash portion of the acquisition, repay Worldpay indebtedness, and cover transaction costs.
- Worldpay Debt: FIS may leave outstanding up to approximately $1.7 billion of Worldpay's existing notes, which would reduce the amount of new permanent financing required.
- Leverage Ratio: The Second Amendment allows FIS to exclude acquisition-related indebtedness (utilizing at least $1.5 billion of debt financing) from the maximum leverage ratio calculation prior to the acquisition's consummation or termination.
Note: The filing does not provide specific values for revenue, profit, cash flow, or operating margins.
Material Changes Versus Prior Period
The primary material changes involve the restructuring of financing facilities to support the Worldpay acquisition:
- First Amendment (March 29, 2019): Reduced the Bridge Facility commitment by $2.0 billion and enabled limited conditionality borrowing of up to $2.0 billion in revolving loans.
- Second Amendment (April 5, 2019): Modified the leverage ratio covenant to exclude specific acquisition financing, provided such financing includes provisions for repayment if the acquisition is not completed.
Guidance, Outlook, and Risks
Management Commentary and Outlook: FIS intends to replace the Bridge Facility with permanent financing prior to the closing of the acquisition. If new unsecured notes are not issued before closing, FIS plans to use the Bridge Facility, commercial paper, and revolving credit to pay the purchase price and fees, intending to refinance the Bridge Facility post-closing.
Risks and Contingencies: The filing includes extensive forward-looking statements and risk factors, including:
- Failure to complete the transaction or achieve expected synergies.
- Integration difficulties, customer loss, or key employee attrition.
- Unforeseen liabilities of Worldpay.
- Market conditions affecting the ability to raise permanent financing.
- Regulatory changes, cybersecurity breaches, and competitive pressures.
Investor Verification Checklist
- Verify the final terms of the permanent financing ($11.1 billion target) and whether the $1.7 billion of Worldpay notes will be refinanced or left outstanding.
- Confirm the status of the acquisition closing and whether the Bridge Facility is being replaced as planned.
- Review the definitive joint proxy statement/prospectus (Form S-4) for detailed transaction terms and risk disclosures.
- Monitor the impact of the leverage ratio amendment on FIS's future debt covenants post-acquisition.
- Assess the integration progress and any early indicators of customer or employee retention issues.