Business Context and Reporting Period
Company: Global Payments Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: July 15, 2019 (Earliest event reported: July 9, 2019)
Context: The filing details the execution of definitive credit agreements to finance the previously announced merger with Total System Services, Inc. (TSYS).
Key Financial Metrics and Debt Structure
This filing focuses on the establishment of new debt facilities rather than reporting operational financial results (revenue, profit, or cash flow) for a specific period.
- Term Loan Facility: $2.0 billion senior unsecured term loan, with an option to increase capacity by an additional $1.0 billion.
- Revolving Credit Facility: $3.0 billion senior unsecured revolving credit facility.
- Bridge Facility Adjustment: The initial $2.75 billion bridge facility commitment was reduced to approximately $2.1 billion upon entry into the new agreements.
- Maturity: Both facilities mature on the fifth anniversary of the Merger Closing Date.
- Interest Rates: Variable rates based on LIBOR or Base Rate plus a margin ranging from 0.125% to 1.875% depending on the Company's credit rating.
- Currencies: Borrowings available in US dollars, euros, sterling, Canadian dollars, and other currencies subject to conditions.
Material Changes Versus Prior Period
The primary material change is the replacement of the existing second Amended and Restated Credit Agreement (dated July 31, 2015) with the new Term Loan and Revolving Credit Agreements. These new facilities are structured specifically to fund the merger with TSYS and will become available for borrowing on the Merger Closing Date.
Guidance, Outlook, Risks, and Contingencies
- Contingencies: Borrowings related to the Merger are subject to limited conditionality, while other borrowings are subject to customary conditionality. Lenders' commitments will terminate if the Merger Agreement is terminated or if the Merger is not consummated by the Termination Date.
- Covenants: The agreements include customary affirmative and restrictive covenants, including financial covenants based on leverage and interest coverage ratios.
- Events of Default: Standard events of default are included, which could allow lenders to declare obligations immediately due and payable.
- Guarantees: The Company's obligations are not guaranteed by any person, though the Company guarantees borrowings made by its Subsidiary Borrowers.
Important Facts for Investor Verification
- Verify the specific terms of the leverage and interest coverage ratio covenants in the attached Exhibits 10.1 and 10.2.
- Confirm the exact Merger Closing Date to determine when the $5.0 billion in total facilities become available.
- Monitor the Company's credit rating, as it directly impacts the interest rate margin (ranging from 0.125% to 1.875%).
- Review the conditions under which the $1.0 billion accordion feature for the Term Loan can be exercised.