Business Context and Reporting Period
Company: EVERTEC, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: November 4, 2016
Event: Entry into a Material Definitive Agreement (Third Amendment to Credit Agreement).
On November 4, 2016, EVERTEC Group, LLC (the Borrower), a main operating subsidiary of EVERTEC, Inc., entered into a third amendment to its Credit Agreement dated April 17, 2013. The amendment modifies the maturity dates and terms of specific portions of the company's term loan A and revolving credit facilities.
Key Financial Metrics and Debt Structure
This filing details the restructuring of the company's senior secured credit facilities. Specific revenue, profit, or cash flow metrics are not provided in this document.
| Facility Component | Amount | New Maturity Date | Original Maturity Date |
|---|---|---|---|
| 2020 Term A Loan | Approx. $219 million | January 17, 2020 | April 17, 2018 |
| 2018 Term A Loan | Approx. $30 million | April 17, 2018 | April 17, 2018 |
| 2020 Revolving Facility | $65 million | January 17, 2020 | April 17, 2018 |
| 2018 Revolving Facility | $35 million | April 17, 2018 | April 17, 2018 |
| Term B Loan | Approx. $387 million (outstanding as of Sept 30, 2016) | April 17, 2020 | April 17, 2020 |
Interest Rates:
- 2018/2020 Term A & Revolving: Adjusted LIBOR + 2.50% or ABR + 1.50%.
- Term B Loan: Adjusted LIBOR (min 0.75%) + 2.75% or ABR + 1.75%.
Material Changes Versus Prior Period
The primary material change is the extension of the maturity dates for the majority of the Term A and Revolving facilities from April 17, 2018, to January 17, 2020. Additionally, the leverage ratio covenants have been tightened:
- 2018 Facilities: Maximum senior secured leverage ratio reduced from 6.60x to 4.75x.
- 2020 Facilities: Maximum senior secured leverage ratio set at 4.75x, stepping down to 4.25x after 24 months.
Guidance, Outlook, and Risks
Use of Proceeds: Borrowings may be used for general corporate purposes, including permitted acquisitions.
Covenants: The agreement includes standard negative covenants limiting dividends, stock repurchases, additional indebtedness, asset sales, and mergers.
Collateral: The facilities are secured by substantially all assets of the Borrower and subsidiary guarantors, including capital stock pledges.
Events of Default: Include nonpayment, breach of covenants, insolvency, bankruptcy, and change of control.
The filing does not contain specific forward-looking guidance on revenue or earnings, nor does it detail specific risks beyond standard credit agreement defaults.
Investor Verification Checklist
- Verify the exact outstanding principal balance of the Term B Loan as of the most recent quarter to confirm the $387 million figure cited.
- Review the company's current leverage ratio to ensure compliance with the new 4.75x covenant threshold.
- Confirm the amortization schedule for the 2018 and 2020 Term A loans to assess near-term cash flow requirements.
- Check for any subsequent amendments or waivers regarding the leverage ratio step-down provisions.