Business Context and Reporting Period
This Form 8-K was filed by SS&C Technologies Holdings, Inc. on March 14, 2012. The report details the entry into a material definitive agreement to acquire GlobeOp Financial Services S.A. and the creation of a new credit facility to finance the transaction.
Key Financial Metrics and Transaction Details
- Acquisition Offer: SS&C agreed to acquire 100% of GlobeOp for 485 pence per share in cash.
- Transaction Value: Approximately 572 million pounds (approximately $900 million USD based on current exchange rates).
- Financing Structure: A new Credit Agreement was established with the following facilities:
- Term A-1 Loans: $0
- Term A-2 Loans: $300 million
- Term B-1 Loans: $725 million
- Term B-2 Loans: $100 million
- Bridge Loans: $142 million
- Revolving Credit Facility: $100 million (includes $25 million letter of credit and $20 million swingline)
- Interest Rates: Term A and Revolver initially at LIBOR + 2.75% (or Base + 1.75%); Term B at LIBOR + 3.25% (or Base + 2.25%); Bridge Loans at LIBOR + 2.75% (or Base + 1.75%).
- Collateral: Substantially all tangible and intangible assets of SS&C, SS&C Technologies, and material domestic subsidiaries are pledged as security.
Material Changes and Conditions
The filing represents a significant change in capital structure and strategic direction. The transaction is subject to customary conditions, including:
- Acceptance by holders of at least 70% of GlobeOp share capital.
- Expiration or termination of the Hart-Scott-Rodino waiting period.
- Receipt of required regulatory approvals.
SS&C has entered into forward currency transactions and currency options to mitigate foreign exchange risk associated with the GBP-denominated offer price.
Outlook, Risks, and Management Commentary
Outlook: The transaction is expected to close by the middle of 2012. Proceeds will fund the GlobeOp offer, refinance existing debt, and potentially finance the pending acquisition of Thomson Reuters' PORTIA business.
Risks and Contingencies:
- Covenants: The Credit Agreement restricts dividends, additional debt, equity repurchases, and asset dispositions. It requires maintaining a consolidated net senior secured leverage ratio.
- Default: Failure to comply with covenants could trigger immediate repayment of all outstanding loans and foreclosure on collateral.
- Forward-Looking Risks: Risks include integration challenges, regulatory approval delays, litigation, foreign currency fluctuations, and changes in economic conditions.
Investor Verification Checklist
- Verify the final exchange rate used to convert the 572 million pound offer price to USD at closing.
- Confirm the status of regulatory approvals, specifically the Hart-Scott-Rodino waiting period and other jurisdictional clearances.
- Review the full text of the Credit Agreement (Exhibit 10.1) for specific leverage ratio thresholds and covenant definitions.
- Monitor the acceptance rate of the offer by GlobeOp shareholders to ensure the 70% threshold is met.
- Assess the impact of the new debt load on SS&C's liquidity and ability to service interest payments under the specified margins.