8-KMaterial AgreementsFinancial EventsOther Events+1

Fidelity National Information Services, Inc. 8-K Report, Material Agreement (Jun 4, 2019)

Filed June 4, 2019For Securities:FIS

Summary

Fidelity National Information Services, Inc. (FIS) filed an 8-K on June 4, 2019, detailing significant updates to its credit facilities and commercial paper programs, primarily to support its pending acquisition of Worldpay. The company entered into a Third Amendment and Joinder to its Credit Agreement, substantially increasing its revolving credit commitments to $5.5 billion and adding a new Euro swing line subfacility. This amendment also enhanced FIS's flexibility by allowing for future increases in revolving credit commitments and adjusted its consolidated EBITDA calculation to include a higher percentage for cost savings and synergies over a longer period. In conjunction with the credit agreement amendment, FIS also increased the capacity of its U.S. Commercial Paper Program to $5.5 billion and established a new Euro-Commercial Paper Program with a capacity of approximately $4.735 billion. These actions provide FIS with substantial liquidity to manage the financial obligations associated with the Worldpay acquisition and for general corporate purposes, signaling a proactive approach to financing its strategic growth initiatives.

Key Highlights

  • 1Increased total revolving credit commitments under the Credit Agreement by $1.5 billion to an aggregate of $5.5 billion.
  • 2Established a new Euro swing line subfacility with an aggregate principal amount of $4.735 billion (USD equivalent).
  • 3Enhanced future flexibility by increasing the capacity for additional revolving credit commitments by up to $1.5 billion.
  • 4Adjusted consolidated EBITDA calculation: increased the cap on add-backs for cost savings/synergies from 15% to 20% and extended the realization period from 18 to 24 months.
  • 5Increased the capacity of the U.S. Commercial Paper Program to $5.5 billion.
  • 6Established a new Euro-Commercial Paper Program with a capacity of up to $4.735 billion (or currency equivalent).

Frequently Asked Questions

The primary purpose of these amendments and new programs is to bolster FIS's liquidity and financial flexibility to support the pending acquisition of Worldpay, as well as for general corporate purposes. This includes backstopping potential note issuances under commercial paper programs.

The amendments increase FIS's available borrowing capacity under its revolving credit facility and commercial paper programs. While this provides liquidity, it also means a higher potential for increased debt levels if FIS utilizes these facilities. The specific impact on FIS's overall debt leverage will depend on how much it actually draws down on these credit lines.

The changes to the consolidated EBITDA calculation, specifically increasing the add-back cap for cost savings/synergies to 20% and extending the period to 24 months, are favorable to FIS. This allows for a higher reported EBITDA in the near term, potentially improving financial covenants and debt coverage ratios, especially as FIS integrates Worldpay and realizes expected synergies.

Yes, the establishment of the Euro-Commercial Paper Program and the Euro swing line subfacility are expected to be used, in part, for payment of certain costs and expenses related to the Worldpay transaction, alongside general corporate purposes.