Business Context and Reporting Period
Company: Global Payments Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: August 19, 2022 (Earliest event reported)
Reporting Period: Events occurring on August 19, 2022, and August 22, 2022.
This filing details the closing of a significant senior notes offering and the entry into a new revolving credit facility. These actions are primarily in connection with the previously announced Agreement and Plan of Merger to acquire EVO Payments, Inc. (the "EVO Acquisition").
Key Financial Metrics and Capital Structure
Senior Notes Offering
On August 22, 2022, the Company completed a public offering of $2.5 billion in aggregate principal amount of Senior Notes across four tranches:
- 2027 Notes: $500 million at 4.950% interest.
- 2029 Notes: $500 million at 5.300% interest.
- 2032 Notes: $750 million at 5.400% interest.
- 2052 Notes: $750 million at 5.950% interest.
Interest is payable semi-annually. The Notes are unsecured and unsubordinated, ranking equally with other unsecured indebtedness.
Revolving Credit Facility
On August 19, 2022, the Company entered into a new Credit Agreement establishing a $5.75 billion unsubordinated unsecured revolving credit facility.
- Maturity: Five years from the closing date (August 19, 2027).
- Interest Rate: Based on SOFR or Base Rate plus an applicable margin ranging from 1.125% to 1.875% (initially 1.375%).
- Currencies: Available in US dollars, euros, sterling, Canadian dollars, and others.
- Replacement: This facility replaces the existing Term Loan and Revolver Credit Agreements dated July 9, 2019.
Bridge Facility Termination
The Company terminated the remaining commitments under a previously disclosed $4.325 billion senior unsecured bridge loan facility. Following the closing of the new Revolving Credit Facility and the Senior Notes Offering, the bridge commitment was reduced to zero.
Material Changes and Use of Proceeds
The primary material change is the restructuring of the Company's debt profile to facilitate the EVO Acquisition. The net proceeds from the $2.5 billion Senior Notes Offering will be used for:
- Refinancing certain Company indebtedness, including borrowings under the Revolving Credit Facility.
- Making cash payments in connection with the EVO Acquisition.
- Refinancing certain outstanding indebtedness of EVO.
- Paying transaction fees and expenses related to the EVO Acquisition.
- General corporate purposes.
The filing does not provide specific revenue, profit, or cash flow figures for the period, as this is a transactional filing rather than a periodic financial report.
Outlook, Risks, and Contingencies
Contingent Redemption
The Indenture includes a mandatory redemption provision for the 2027 and 2029 Notes. If the EVO Acquisition is not consummated by November 1, 2023 (or a later agreed "End Date"), or if the Company notifies the Trustee it will not pursue the acquisition, the Company must redeem these notes at 101% of principal plus accrued interest.
Change of Control
In the event of a "Change of Control Repurchase Event," holders have the right to require the Company to repurchase the Notes at 101% of the principal amount plus accrued interest.
Covenants and Defaults
The Revolving Credit Agreement includes financial covenants based on net leverage and interest coverage ratios. The Indenture limits the Company's ability to incur secured indebtedness without providing equal and ratable security for the Notes. As of the filing date, the Company has no property constituting a "principal property" under the Indenture.
Investor Verification Checklist
- Verify the final closing date and total proceeds received from the $2.5 billion Senior Notes Offering.
- Confirm the status of the EVO Acquisition and whether the November 1, 2023, deadline for mandatory redemption of the 2027/2029 Notes remains applicable.
- Review the specific terms of the new $5.75 billion Revolving Credit Facility regarding leverage ratios and interest rate margins.
- Monitor the Company's credit rating, as it directly impacts the applicable margin on the new Revolving Credit Facility.
- Check for any subsequent filings regarding the refinancing of the existing Term Loan and Revolver Credit Agreements.