01—Abstract
Summary
Summary of the 8-K filed December 20, 2016. Cited figures are marked; the original filing is the authoritative source.
Cboe Global Markets, Inc. (CBOE) filed an 8-K on December 20, 2016, detailing material definitive agreements related to its financing for the proposed acquisition of Bats Global Markets Inc. (Bats).
The company entered into a $1.0 billiona senior unsecured delayed draw term loan facility, which can be increased by up to $500 million, to primarily finance the Bats acquisition and related expenses. Additionally, CBOE established a $150 million senior unsecured revolving credit facility, expandable to $250 million, for general corporate purposes and working capital needs. These credit facilities are crucial for CBOE's strategic move to acquire Bats, a significant transaction expected to reshape the exchange landscape.
The availability of the term loan is contingent upon the consummation of the Bats acquisition. The report also discloses changes to the board of directors related to the acquisition, including accelerated vesting of unvested restricted stock awards for directors stepping down and potential pro-rata retainer payments for those leaving before the 2017 annual meeting.
02—Key points
Key Highlights
- CBOE entered into a $1.0 billion senior unsecured delayed draw term loan facility to finance the acquisition of Bats Global Markets Inc.
- The term loan facility has the potential to be increased by an additional $500 million, bringing the total to $1.5 billion.
- A $150 million senior unsecured revolving credit facility was established for general corporate purposes and working capital, with an option to increase by $100 million.
- The availability of the term loan is conditioned upon the consummation of the Bats acquisition.
- The acquired business (Bats) may have certain existing indebtedness repaid using proceeds from the term loan.
- The term loan and revolving credit facilities bear interest based on LIBOR or a prime rate, plus a margin determined by CBOE's public debt ratings.
- Board members resigning due to the acquisition will have unvested restricted stock awards vest and may receive pro-rata retainer payments.
03—Questions
Frequently Asked Questions
What is the primary purpose of the new credit facilities announced by CBOE?
The primary purpose of the new credit facilities, specifically the $1.0 billion term loan, is to finance Cboe Global Markets, Inc.'s proposed acquisition of Bats Global Markets Inc. The revolving credit facility is intended for general corporate purposes and working capital needs.
What is the total potential amount CBOE can borrow under these new agreements?
Under the term loan facility, CBOE can borrow up to $1.0 billion, with an option to increase commitments by $500 million to $1.5 billion. The revolving credit facility is for $150 million, with an option to increase by $100 million to $250 million. In total, the company has secured potential borrowing capacity of up to $1.75 billion.
Are there any conditions attached to drawing funds from the term loan facility?
Yes, the availability of commitments under the term loan facility is conditioned upon confirmation that the Bats acquisition has been consummated or will be consummated concurrently with the extension of the loans.
How will the interest rates on these new credit facilities be determined?
Interest rates for both the term loan and revolving credit facilities will be determined at CBOE's option. They can either be based on the London Interbank Offered Rate (LIBOR) plus a margin (1.00% to 1.75% per annum) or a daily floating rate based on the administrative agent's prime rate plus a margin (0% to 0.75% per annum). The specific margin depends on CBOE's public debt ratings.
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