8-KMaterial AgreementsFinancial EventsOther Events

Fidelity National Information Services, Inc. 8-K Report, Material Agreement (Aug 11, 2016)

Filed August 11, 2016For Securities:FIS

Summary

Fidelity National Information Services, Inc. (FIS) filed an 8-K on August 11, 2016, to report material definitive agreements related to its credit facilities. The company entered into a Sixth Amendment and Restatement of its Credit Agreement and a Second Amendment of its Term Loan Credit Agreement, both effective August 10, 2016. These amendments primarily focus on extending the maturity of its revolving credit commitments and adjusting leverage ratio covenants. Specifically, the revolving credit commitments were extended by two years to August 10, 2021, while the existing $600 million term loan was fully repaid ahead of its original maturity. A significant aspect for investors is the updated leverage ratio covenant, which will gradually step down from 4.25x to 3.50x by September 30, 2017. This strategic refinancing aims to provide FIS with enhanced financial flexibility and a prolonged debt maturity profile.

Key Highlights

  • 1FIS amended and restated its primary Credit Agreement, extending the maturity of its $3.0 billion revolving credit commitments to August 10, 2021.
  • 2The company fully repaid its $600 million term loan in advance of its scheduled maturity.
  • 3Leverage ratio covenants were adjusted, requiring a phased reduction from 4.25x to 3.50x by September 30, 2017.
  • 4The amendments were executed on August 10, 2016, indicating proactive financial management.
  • 5These actions signal FIS's commitment to managing its debt structure and improving its financial flexibility.
  • 6The changes align the Term Loan Credit Agreement with the updated Credit Agreement, ensuring consistency in financial covenants.

Frequently Asked Questions

The primary impact is the extension of the maturity date for FIS's $3.0 billion in revolving credit commitments by two years, from December 18, 2019, to August 10, 2021. Additionally, the $600 million term loan was repaid early, simplifying the company's debt structure.

The leverage ratio covenants have been adjusted to require a gradual decrease in the ratio from 4.25x. It will step down to 4.00x by December 31, 2016, 3.75x by March 31, 2017, and further to 3.50x by September 30, 2017. This phased reduction indicates a commitment to deleveraging over time while providing flexibility in the near term.

The filing states that loans under the Restated Credit Agreement will bear interest based on a ratings-based pricing grid. Similarly, commitment fees on unused revolving credit commitments will also be based on this grid. Specific rates are not detailed in this 8-K, but the pricing is variable and linked to FIS's credit ratings.

The early repayment of the term loan suggests FIS had sufficient liquidity or favorable access to capital markets to retire this debt ahead of schedule. This action likely reduces interest expenses and simplifies the company's debt profile, demonstrating strong cash flow management or refinancing capabilities.