Summary
Fair Isaac Corporation (FICO) announced on July 19, 2010, that it entered into a Note Purchase Agreement on July 14, 2010, to issue and sell $245 million in senior unsecured notes to institutional investors in a private placement. The primary stated purpose of this offering is to refinance existing debt obligations, although proceeds may also be used for other general corporate purposes. This action reflects a strategic move by FICO to manage its debt structure and potentially lower its cost of capital or extend its maturity profile. The issuance is structured into four series with varying principal amounts, interest rates, and maturity dates ranging from 2016 to 2020. The notes carry interest rates between 4.72% and 5.59%, payable semi-annually. The agreement includes customary covenants that restrict FICO's future borrowing and financial leverage, requiring the maintenance of a fixed charge coverage ratio of at least 2.50 to 1.00 and a consolidated indebtedness to EBITDA ratio not exceeding 3.00 to 1.00. These covenants are important for investors to monitor as they can impact the company's financial flexibility.
Key Highlights
- 1FICO issued $245 million in senior unsecured notes through a private placement.
- 2The primary use of proceeds is to refinance existing debt obligations.
- 3The notes are issued in four series with maturities between 2016 and 2020.
- 4Interest rates on the notes range from 4.72% to 5.59% per annum.
- 5The Note Purchase Agreement includes financial covenants, specifically a fixed charge coverage ratio of at least 2.50:1.00 and a debt-to-EBITDA ratio of no more than 3.00:1.00.
- 6The agreement contains typical covenants for unsecured credit facilities and default provisions, including a change of control clause.