Business Context and Reporting Period
This Form 8-K, filed on September 30, 2009, reports events occurring on October 1, 2009, regarding Fidelity National Information Services, Inc. (FIS). The primary event is the completion of the merger with Metavante Corporation, where Metavante merged into a wholly-owned subsidiary of FIS. The filing details the financing arrangements executed to facilitate the merger, the exchange of debt, and significant changes to the company's board of directors and executive leadership.
Key Financial Metrics and Debt Arrangements
The filing focuses on debt restructuring and new financing rather than operating performance metrics like revenue or profit, which are not provided in this specific report.
- Debt Exchange and New Term Loan: FIS created a new $500 million Tranche C Term Loan under its existing credit agreement. Lenders exchanged $500 million of Metavante term loans for this new FIS loan.
- Debt Repurchase: FIS purchased $423.75 million of remaining Metavante term loans at par in cash, cancelling those obligations.
- Remaining Metavante Debt: Following the exchange and repurchase, $800 million of term loans remained outstanding under the Metavante Credit Agreement, now guaranteed by FIS.
- Securitization Facility: FIS established an accounts receivable securitization facility providing up to $145 million in capital funding, with an option to increase the aggregate amount to $200 million.
- Interest Rates: The new Tranche C Term Loan bears interest at 4.25% plus adjusted LIBOR or 3.25% plus the greater of the prime rate or federal funds rate plus 0.5%.
Material Changes Versus Prior Period
The most significant material change is the structural consolidation of Metavante into FIS. Key changes include:
- Capital Structure: Metavante shareholders received 1.35 shares of FIS common stock for each share of Metavante common stock.
- Debt Obligations: FIS assumed and guaranteed Metavante's remaining debt obligations, integrating them into the FIS credit framework.
- Leadership: The FIS Board of Directors expanded from six to nine members. Frank R. Martire (former Metavante CEO) was appointed President and CEO of FIS, and Michael D. Hayford (former Metavante COO) was appointed CFO.
Guidance, Outlook, and Executive Compensation
The filing does not provide forward-looking financial guidance or revenue outlooks. However, it details substantial executive compensation arrangements tied to the merger integration:
- William P. Foley, II (Executive Chairman): Received a $9.1 million retention equity award (vesting in six months) and a $1.4 million cash retention award. He is eligible for a $7.0 million synergy bonus if FIS achieves $260 million in post-merger annual recurring cost savings.
- Lee A. Kennedy (Executive Vice Chairman): Awarded a cash retention bonus of approximately $10.47 million.
- George Scanlon (Corporate EVP - Finance): Awarded a cash retention bonus of $3.0 million.
- James W. Woodall (SVP, Chief Accounting Officer): Received an amended agreement with increased severance benefits (200% of salary and bonus).
- Risks and Covenants: The new debt facilities are subject to customary financial covenants, including minimum interest coverage ratios and maximum leverage ratios. Events of default include failure to pay principal/interest or breach of covenants.
Important Facts for Investor Verification
- Verify the total pro forma debt load of the combined entity, specifically the $800 million remaining Metavante debt plus the new $500 million FIS Tranche C loan.
- Confirm the achievement of the $260 million cost savings target required for William P. Foley, II to receive the $7.0 million synergy bonus.
- Review the full text of the Debt Exchange and Joinder Agreement (Exhibit 10.3) and the Receivables Purchase Agreement (Exhibit 99.2) for specific covenant restrictions on dividends and additional indebtedness.
- Monitor the integration progress of Metavante operations to assess the realization of anticipated synergies.
- Check subsequent filings for the actual utilization of the $145 million receivables securitization facility.