Business Context and Reporting Period
ExlService Holdings, Inc. filed a Form 8-K Current Report on May 26, 2011, regarding the entry into a material definitive agreement. The company is incorporated in Delaware and maintains its principal executive offices in New York, New York.
Key Financial Metrics and Debt
This filing details the establishment of a new credit facility rather than reporting operational financial results such as revenue or profit.
- Facility Size: $50 million revolving credit facility.
- Expansion Option: Option to increase commitments by up to an additional $25 million subject to approvals.
- Subfacility: Includes a letter of credit subfacility.
- Interest Rates (Applicable Margin):
- Alternate Base Rate (ABR) Loans: 0.00% to 0.50% per annum.
- Eurodollar Loans: 2.00% to 2.50% per annum.
- Commitment Fee: 0.350% to 0.450% per annum on unused commitments.
- Security: Obligations are secured by all or substantially all assets of the borrower and material domestic subsidiaries.
Material Changes
The primary material change is the execution of a new Credit Agreement with JPMorgan Chase Bank, N.A., as Administrative Agent. This agreement replaces or supplements prior financing arrangements to provide liquidity for working capital and general corporate purposes. The filing does not provide comparative financial data against prior periods as it is a transactional report.
Guidance, Covenants, and Risks
The Credit Agreement imposes specific financial and operational constraints on the company:
- Covenants: Includes restrictions on incurring additional indebtedness, creating liens, making certain investments, paying dividends, and undertaking mergers or asset dispositions.
- Financial Maintenance: The company must maintain a fixed charge coverage ratio and a leverage ratio.
- Events of Default: Includes nonpayment, breach of covenants, cross-defaults, change of control, and bankruptcy-related events.
- Future Filing: The full text of the Credit Agreement is expected to be filed as an exhibit to the Form 10-Q for the quarter ending June 30, 2011.
Investor Verification Checklist
- Verify the full text of the Credit Agreement in the upcoming Form 10-Q for the quarter ending June 30, 2011.
- Confirm the specific thresholds for the fixed charge coverage ratio and leverage ratio required by the new agreement.
- Monitor whether the company exercises the option to increase the facility by the additional $25 million.
- Review the company's current leverage ratio to determine the applicable interest rate margin and commitment fee.