8-KEarnings & ResultsMaterial AgreementsFinancial Events+2

FISERV INC 8-K Report, Material Agreement (May 5, 2015)

Filed May 5, 2015For Securities:FISV

Summary

This Form 8-K filing from Fiserv, Inc. (FISV) on May 5, 2015, primarily details significant updates to the company's credit facilities. The most crucial information for investors is the entry into a Second Amended and Restated Credit Agreement, which restates their existing $2 billion revolving credit facility, maturing in April 2020 with an option for a two-year extension. This agreement also allows for potential increases in the credit line by up to $750 million. Furthermore, the filing announces the release of subsidiary guarantees under the company's Term Loan Agreement, aligning its terms with the new credit facility. This strategic financial maneuver provides Fiserv with enhanced flexibility and potentially a stronger balance sheet. The company also reported its first-quarter 2015 financial results on May 5, 2015, alongside this filing, though the specific results are contained in an attached press release.

Key Highlights

  • 1Fiserv entered into a Second Amended and Restated Credit Agreement, amending its existing $2 billion revolving credit facility.
  • 2The new credit facility matures on April 30, 2020, with an option for a two-year extension subject to lender consent.
  • 3The company has the ability to increase the revolving credit facility by up to $750 million under certain conditions.
  • 4Fiserv drew $108 million on April 30, 2015, to repay existing borrowings and fund operations.
  • 5Subsidiary guarantees under the Term Loan Agreement have been released to align with the new credit facility.
  • 6The Credit Agreement includes financial covenants such as a maximum Leverage Ratio and a minimum interest coverage ratio.
  • 7The company issued a press release on May 5, 2015, announcing its financial results for the quarter ended March 31, 2015.

Frequently Asked Questions

The primary purpose is to amend and restate Fiserv's existing $2 billion revolving credit facility. This provides the company with updated terms, a defined maturity date, and flexibility to potentially increase borrowing capacity and extend the maturity, supporting ongoing operations and potential future needs.

The release of subsidiary guarantees simplifies Fiserv's debt structure. It signifies a shift, potentially moving towards an unsecured debt profile for this facility, and aligns the terms with the new credit agreement, reducing complexity and possibly improving financial flexibility.

Yes, the Credit Agreement imposes covenants, notably a limit on consolidated indebtedness to no more than 3.5 times consolidated EBITDA (with flexibility to increase to 4.0 times in connection with acquisitions) and a requirement to maintain EBITDA of at least three times consolidated interest expense. These are standard covenants designed to ensure the company maintains a healthy financial position.

Fiserv drew $108 million under the new credit facility on April 30, 2015. The proceeds were used to repay outstanding borrowings under the previous credit agreement and fund ongoing operations. This indicates a refinancing and operational funding rather than a significant new debt issuance at that moment.