Business Context and Reporting Period
Company: Fidelity National Information Services, Inc. (FIS)
Filing Type: Form 8-K (Current Report)
Date of Report: August 21, 2015
Event: Entry into a Material Definitive Agreement (Sixth Amendment of the Credit Agreement).
Key Financial Metrics
This filing does not report specific revenue, profit, cash flow, or margin figures. It focuses on debt covenant adjustments related to a pending acquisition.
- Maximum Leverage Ratio Covenant: Adjusted to 4.25x as of the closing date of the SunGard Acquisition.
- Future Leverage Ratio: Scheduled to step down to 3.50x after the closing date.
- Debt Treatment: Debt raised to finance the SunGard Acquisition will be ignored for Maximum Leverage Ratio calculations until the closing date (or 35 days after termination of the merger agreement).
- Interest Rates: Loans bear interest based on a ratings-based pricing grid.
- Commitment Fees: Revolving credit commitments are subject to fees on unused portions based on a ratings-based pricing grid.
Material Changes Versus Prior Period
The filing details amendments to the Existing Credit Agreement (originally dated January 18, 2007, and previously amended multiple times) to accommodate the pending acquisition of SunGard, a Delaware corporation. Key changes include:
- Modification of the leverage ratio covenant to allow for higher leverage during the acquisition financing period.
- Specification that borrowing revolving loans for the acquisition is subject to limited conditionality customary in acquisition financings.
- Provision for a "springing guaranty" of the Amended Credit Agreement by the issuer of SunGard Notes, effective 90 days after the SunGard Closing Date, if the notes remain in place.
Guidance, Outlook, and Risks
Outlook and Management Commentary: FIS intends to file a Registration Statement on Form S-4 containing a consent solicitation statement for SunGard stockholders. The company urges SunGard stockholders to read these materials for important information regarding the proposed transaction.
Risks and Contingencies:
- The leverage ratio adjustment is contingent on the closing of the SunGard Acquisition.
- If the SunGard Closing Date does not occur, the debt exclusion for leverage calculations expires 35 days after the termination of the Agreement and Plan of Merger.
- Interest rates and commitment fees are variable and dependent on credit ratings.
Important Facts for Investor Verification
- Verify the status of the SunGard Acquisition and the expected closing date.
- Review the full text of the Amendment Agreement (Exhibit 10.1) for detailed terms regarding the springing guaranty and conditionality of revolving loans.
- Monitor the upcoming Form S-4 filing for the consent solicitation statement and prospectus.
- Confirm the company's credit rating, as it directly impacts the interest rates and commitment fees under the amended agreement.