Summary
Cognizant Technology Solutions Corporation (CTSH) announced on October 7, 2022, that it entered into a new credit agreement on October 6, 2022. This agreement establishes a $650 million Term Loan Facility and a $1.85 billion Revolving Credit Facility, totaling $2.5 billion in New Credit Facilities. The proceeds from the Term Loan Facility are primarily designated to repay existing term loans, while the Revolving Credit Facility will support general corporate purposes. Notably, these new credit facilities are unsecured. The New Credit Facilities mature on October 6, 2027. The Term Loan Facility has minimal scheduled payments in the first year, followed by quarterly installments. The Revolving Credit Facility allows for borrowing, repayment, and reborrowing until maturity. Interest rates are variable, based on either the Term Benchmark or ABR Rate plus an applicable margin, which will be adjusted based on the Company's Leverage Ratio or public debt ratings. The company also retains the option to increase the credit facilities by up to $1 billion under certain conditions.
Key Highlights
- 1Cognizant entered into a new $2.5 billion credit agreement consisting of a $650 million Term Loan Facility and a $1.85 billion Revolving Credit Facility.
- 2The Term Loan Facility will be used to repay existing term loans, and the Revolving Credit Facility is for general corporate purposes.
- 3The new credit facilities are unsecured.
- 4The maturity date for both facilities is October 6, 2027.
- 5Interest rates are variable, with initial margins of 0.875% for Eurocurrency Rate loans and 0% for ABR Rate loans, subject to adjustment based on leverage or debt ratings.
- 6The company has the ability to increase the credit facilities by up to an additional $1 billion.
- 7A key financial covenant requires the Company's Leverage Ratio not to exceed 3.50:1.00 (or 3.75:1.00 following certain acquisitions).