8-KMaterial AgreementsExhibits & Filings

FAIR ISAAC CORP 8-K Report, Material Agreement (Oct 23, 2006)

Filed October 23, 2006For Securities:FICO

Summary

Fair Isaac Corporation (FICO) announced on October 23, 2006, the execution of a new Credit Agreement on October 20, 2006. This agreement establishes a significant unsecured revolving credit facility totaling $300 million, with an option to increase it to $500 million under specific conditions. This facility has a five-year term and is intended to support FICO's general corporate needs, including potential debt refinancing, acquisitions, and share repurchases. The new credit facility provides substantial financial flexibility for Fair Isaac. The terms include variable interest rates based on either a base rate or an adjusted Eurodollar rate, with margins tied to the company's leverage ratio. Key financial covenants are in place, requiring FICO to maintain a fixed coverage ratio of at least 2.50 to 1.00 and a consolidated leverage ratio not exceeding 3.00 to 1.00. The agreement also outlines standard default provisions, including those triggered by a change of control or material defaults on other debt.

Key Highlights

  • 1FICO entered into a $300 million unsecured five-year revolving credit facility.
  • 2The facility can be expanded up to $500 million under certain terms.
  • 3Proceeds are designated for capital needs, general business purposes, debt refinancing, acquisitions, and share repurchases.
  • 4Interest rates are variable, based on a base rate or adjusted Eurodollar rate plus an applicable margin tied to leverage ratio.
  • 5Key financial covenants include a minimum fixed coverage ratio of 2.50:1.00 and a maximum consolidated leverage ratio of 3.00:1.00.
  • 6The agreement contains standard default provisions, including those related to change of control or material debt defaults.
  • 7Major financial institutions, including Wells Fargo and U.S. Bank, are involved as agents and lenders.

Frequently Asked Questions

The primary purpose of the $300 million credit facility is to provide Fair Isaac Corporation with financial flexibility for its capital needs and general business operations. This includes potential uses such as refinancing existing debt, funding acquisitions, and repurchasing the company's capital stock.

Fair Isaac must maintain a fixed coverage ratio of not less than 2.50 to 1.00 and a consolidated leverage ratio of not more than 3.00 to 1.00. These are key financial covenants designed to ensure the company's financial stability.

The initial size of the revolving credit facility is $300 million, with the potential to be increased to $500 million subject to certain terms and conditions. Interest rates will be based on either a U.S. Bank prime rate plus a spread, or an adjusted Eurodollar rate plus an applicable margin ranging from 30 to 55 basis points, dependent on the company's consolidated leverage ratio.

Events of default typically include customary provisions for unsecured credit facilities. Specific examples mentioned are a change of control of the company or the company defaulting on other debt exceeding $25 million. If an event of default occurs, the interest rate increases by 2%, and all outstanding obligations may become immediately due and payable.