Summary
Cognizant Technology Solutions Corporation (CTSH) announced on November 9, 2018, the entry into a new credit agreement, effective November 6, 2018. This agreement establishes new credit facilities totaling $2.5 billion, comprising a $750 million term loan facility and a $1.75 billion revolving credit facility. The proceeds from the term loan are primarily allocated to repaying existing term loan obligations, while the revolving credit facility is designated for general corporate purposes. The new facilities are unsecured and mature on November 6, 2023.
Key Highlights
- 1New credit facilities established with a total commitment of $2.5 billion.
- 2Includes a $750 million term loan facility and a $1.75 billion revolving credit facility.
- 3Term loan proceeds used to refinance existing debt; revolving credit for general corporate purposes.
- 4The new credit facilities are unsecured.
- 5Maturity date for both facilities is November 6, 2023.
- 6Includes a financial covenant requiring the Company not to exceed a maximum Leverage Ratio of 3.50:1.00 (or 3.75:1.00 following certain acquisitions).
- 7The Company has the option to increase the New Credit Facilities by up to an additional $1 billion under certain conditions.
Frequently Asked Questions
The new credit facilities consist of a $750 million term loan facility and a $1.75 billion revolving credit facility, totaling $2.5 billion in aggregate commitment.
The proceeds from the term loan facility will primarily be used to repay the company's existing term loan. The revolving credit facility will be used for general corporate purposes.
Both the term loan facility and the revolving credit facility mature on November 6, 2023. The new credit facilities are unsecured.
The primary financial covenant requires Cognizant to maintain a maximum Leverage Ratio of 3.50:1.00. This ratio can be temporarily increased to 3.75:1.00 for up to four fiscal quarters following certain material acquisition transactions.