8-KEarnings & ResultsMaterial AgreementsFinancial Events+1

FISERV INC 8-K Report, Material Agreement (Oct 29, 2013)

Filed October 29, 2013For Securities:FISV

Summary

Fiserv, Inc. (FISV) has filed an 8-K report detailing a significant refinancing transaction that occurred on October 25, 2013. The company entered into a new $900 million Term Loan Agreement, the proceeds of which were used to pay down its existing Amended and Restated Credit Agreement. This strategic move effectively replaces a portion of its revolving credit facility with a term loan, altering the company's debt structure. Additionally, Fiserv amended its Revolving Credit Agreement, extending its maturity date to October 25, 2018, and aligning certain terms with the new Term Loan Agreement. The company also announced its financial results for the quarter ended September 30, 2013, via a press release. Investors should note the new debt covenants, including limitations on consolidated indebtedness relative to EBITDA and requirements for maintaining EBITDA to cover interest expense, which will impact future financial flexibility.

Key Highlights

  • 1Fiserv entered into a new $900 million Term Loan Agreement on October 25, 2013.
  • 2Proceeds from the Term Loan were used to repay outstanding borrowings under the company's existing credit agreement.
  • 3The Revolving Credit Agreement's maturity was extended to October 25, 2018, and its terms were amended.
  • 4The Term Loan Agreement includes covenants restricting consolidated indebtedness to 3.5x EBITDA and requiring EBITDA to be at least 3x consolidated interest expense.
  • 5The Term Loan Agreement is unsecured but will be guaranteed by material domestic subsidiaries.
  • 6The company also announced its Q3 2013 financial results via press release on October 29, 2013.
  • 7Voluntary prepayments on the Term Loan are permitted without fees, subject to customary breakage costs and minimum requirements.

Frequently Asked Questions

The primary purpose of the new $900 million Term Loan Agreement was to repay outstanding borrowings under Fiserv's existing credit agreement. This action refinanced a portion of the company's debt.

The Term Loan Agreement imposes two key financial covenants: 1) consolidated indebtedness must not exceed three and one-half times the company's consolidated EBITDA, and 2) EBITDA must be at least three times consolidated interest expense. These ratios are calculated on a pro forma basis to include acquisitions and dispositions.

The new Term Loan Agreement has a final maturity date of October 25, 2018. The Amended and Restated Credit Agreement, after its amendment, also has an extended maturity date of October 25, 2018.

The filing indicates that after the repayment, $75 million remained outstanding under the Revolving Credit Agreement. The company intends to use the revolving credit facility for general corporate purposes. While the refinancing changes the debt structure, it doesn't immediately suggest a liquidity crisis, but the covenants will require ongoing management.