Business Context and Reporting Period
Company: EVERTEC, Inc.
Filing Type: Form 8-K (Current Report)
Date: April 14, 2016
Context: The Company entered into a Second Amendment and Waiver to its Credit Agreement dated April 17, 2013. This amendment addresses delays in delivering financial statements and audit opinions for the fiscal year ended December 31, 2015, and subsequent quarters.
Key Financial Metrics and Obligations
This filing does not report revenue, profit, cash flow, or margin figures. It details specific financial obligations and penalties related to the Credit Agreement:
- Amendment Fee: 0.50% of the aggregate principal amount of outstanding term loans and revolving commitments held by consenting lenders.
- Interest Rate Penalty:
- +50 basis points if 2015 and Q1 2016 financial information is not delivered by May 30, 2016.
- +25 basis points (additional) if information is not delivered by July 15, 2016.
- Dividend Restriction: Restricted Payments are prohibited until financial materials are delivered, except for quarterly dividends not exceeding $0.10 per share.
Material Changes and Waivers
The amendment introduces the following material changes to the Credit Agreement terms:
- Extended Deadlines: The deadline to provide 2015 Financial Information is extended to September 15, 2016. Deadlines for Q1 and Q2 2016 financial information are also extended, contingent on public earnings releases by May 16, 2016, and August 15, 2016.
- Waivers Granted: The amendment waives defaults or potential defaults arising from:
- Delayed delivery of the fiscal year 2015 budget.
- Errors and estimated restatement impacts described in the Form 8-K filed on March 23, 2016.
Outlook, Risks, and Contingencies
Management Commentary: The filing indicates that the Company's public filings on Form 10-K and Form 10-Q will satisfy the obligation to deliver information to the Agent under the Credit Agreement.
Risks and Contingencies:
- Cost of Capital: Failure to meet the new extended deadlines will result in increased interest rates on loans.
- Liquidity Constraints: The Company is restricted from making Restricted Payments (such as stock repurchases or dividends above $0.10/share) until the required financial information is delivered to the Agent.
Investor Verification Checklist
- Verify the status of the 2015 Financial Information delivery relative to the September 15, 2016 deadline.
- Confirm whether the Company has issued earnings releases by May 16, 2016, and August 15, 2016, to maintain the extended quarterly reporting deadlines.
- Monitor for any announcements regarding the accrual of the 50 or 75 basis point interest rate penalties.
- Review the March 23, 2016 Form 8-K for details on the errors and restatement impacts that triggered this waiver.