Business Context and Reporting Period
This Form 8-K, filed on September 20, 2019, reports the consummation of the merger between Global Payments Inc. and Total System Services, Inc. (TSYS) on September 17, 2019. TSYS merged into Global Payments, which remains the surviving corporation. The transaction was executed pursuant to the Merger Agreement dated May 27, 2019.
Key Financial Metrics and Capital Structure
The filing details significant changes to the company's capital structure and debt obligations but does not provide specific revenue, profit, or cash flow figures for the combined entity in this report.
- Debt Assumption: Global Payments assumed TSYS's obligations for 3.80% Senior Notes due 2021, 4.00% Senior Notes due 2023, 4.80% Senior Notes due 2026, 4.45% Senior Notes due 2028, and 3.750% Senior Notes due 2023.
- Debt Termination: Both Global Payments and TSYS terminated and repaid all obligations under their respective existing credit agreements (Existing GPN Credit Agreement and Existing TSYS Credit Agreement).
- New Financing: The transaction was financed using term loan borrowings, revolving borrowings under new Credit Agreements dated July 9, 2019, and net proceeds from the issuance of Global Payments Notes (2.650% due 2025, 3.200% due 2029, and 4.150% due 2049).
- Stock Exchange: TSYS shareholders received 0.8101 shares of Global Payments common stock for each share of TSYS common stock held.
Material Changes Versus Prior Period
The primary material change is the structural consolidation of two major payment processing entities. Specific changes include:
- Corporate Governance: The Board of Directors was reconstituted to include six directors from the former Global Payments and six from the former TSYS. The Board was declassified to provide for annual elections.
- Leadership: M. Troy Woods (former TSYS CEO) was appointed Chairman of Global Payments. Kriss Cloninger III (former TSYS Lead Director) was appointed Lead Independent Director. Cameron M. Bready was promoted to President and Chief Operating Officer. Paul M. Todd (former TSYS CFO) was appointed Senior Executive Vice President and Chief Financial Officer.
- Operations: The company established dual headquarters in Atlanta and Columbus, Georgia. The card issuer processing business formerly conducted by TSYS will continue under the TSYS name.
- Authorized Shares: The number of authorized shares of Global Payments Common Stock was increased from 200 million to 400 million.
Guidance, Outlook, and Risks
This filing does not contain forward-looking financial guidance, revenue outlook, or specific risk factors beyond the standard disclosures regarding the merger consummation. However, it notes the following contingencies and arrangements:
- Executive Compensation: New employment agreements were executed for key executives (Sloan, Bready, Sacchi, Green, and Todd) with three-year initial terms. These agreements include significant severance provisions for termination without cause or resignation for good reason, particularly in the event of a change in control (e.g., 300% of base salary and bonus for Mr. Sloan).
- Financial Statements: Audited financial statements for TSYS and unaudited pro forma combined financial statements for the six months ended June 30, 2019, and the year ended December 31, 2018, are filed as exhibits but are not summarized in the text of this report.
Investor Verification Checklist
- Review Exhibit 99.4 for unaudited pro forma condensed combined financial statements to understand the combined entity's projected financial position.
- Verify the specific terms of the new Credit Agreements and Senior Notes issued to finance the merger (Exhibits 4.1 and 4.2).
- Examine the employment agreements for executive severance liabilities in the event of future change-in-control transactions.
- Confirm the integration timeline for the dual headquarters and the retention of the TSYS brand for specific business lines.
- Check the composition of the new Board of Directors and committee assignments to assess governance balance.