SS&C Technologies Holdings Inc current report, 15 December 2011

SEC Filing Summary: SS&C Technologies Holdings Inc. (Form 8-K)

Business Context and Reporting Period

This Current Report on Form 8-K was filed on December 20, 2011, covering events occurring on December 15, 2011, and December 19, 2011. The filing details a significant restructuring of the company's debt facilities and the completion of a bond redemption.

Key Financial Metrics and Debt Structure

  • New Credit Facility: Entered into a $125 million senior secured revolving credit facility with Bank of America, N.A., maturing December 15, 2016.
  • Expansion Option: Includes an accordion feature allowing for up to an additional $75 million in commitments.
  • Sub-facilities: The agreement includes a $25 million letter of credit sub-facility, a $20 million multicurrency borrowing sub-facility, and a $5 million swingline loan sub-facility.
  • Interest Rates: Variable rates based on the Eurocurrency Rate plus 1.25% to 2.50% or Base Rate plus 0.25% to 1.50%, dependent on the Leverage Ratio.
  • Commitment Fees: Ranging from 0.20% to 0.40% on unused portions.
  • Outstanding Borrowings: Approximately $100 million was drawn under the new agreement as of December 15, 2011.
  • Debt Repayment: Proceeds from the new facility were used to repay approximately $99.7 million in outstanding borrowings under the prior facility.

Material Changes Versus Prior Period

  • Termination of Prior Facility: Terminated the existing credit agreement dated November 23, 2005, which included a $200 million term loan, a $75 million Canadian term loan, and a $75 million revolving facility.
  • Redemption of Notes: Completed the full redemption of all 11 3/4% Senior Subordinated Notes due 2013 on December 19, 2011.
  • Security Release: All liens and security interests granted under the prior facility were released upon termination.

Covenants, Risks, and Management Commentary

  • Financial Covenants: The new agreement requires maintaining a consolidated leverage ratio of 3.25 to 1.00 or less and a consolidated fixed charge coverage ratio of 1.50 to 1.00 or greater.
  • Negative Covenants: Includes limitations on additional indebtedness, liens, investments, acquisitions (outside permitted acquisitions), dividends, and affiliate transactions.
  • Collateral: Obligations are secured by substantially all tangible and intangible assets of SS&C Technologies and its guarantors, including intellectual property.
  • Events of Default: Standard provisions including nonpayment, covenant violations, cross-defaults, and Change of Control.

Investor Verification Checklist

  • Verify the exact amount of cash used to redeem the 11 3/4% Senior Subordinated Notes due 2013, as the filing confirms the action but does not state the total redemption cost.
  • Confirm the current Leverage Ratio to ensure compliance with the new 3.25:1.00 covenant threshold.
  • Review the full text of the Credit Agreement (Exhibit 10.1) for specific definitions of "Permitted Acquisitions" and "Change of Control."
  • Assess the impact of the new interest rate margins on future interest expense compared to the fixed 11.75% rate on the redeemed notes.