8-KMaterial AgreementsFinancial EventsOther Events+1

FISERV INC 8-K Report, Material Agreement (May 22, 2015)

Filed May 22, 2015For Securities:FISV

Summary

Fiserv, Inc. (FISV) has filed an 8-K report on May 22, 2015, to announce the completion of a significant debt offering. The company successfully issued $850 million in 2.700% Senior Notes due 2020 and $900 million in 3.850% Senior Notes due 2025, totaling $1.75 billion in aggregate principal amount. These notes were issued under existing indentures, with the terms and conditions detailed in supplemental indentures. The primary strategic purpose behind this debt issuance is to refinance existing debt. Fiserv intends to use the net proceeds to redeem its outstanding 3.125% Senior Notes due 2016 and its 6.8% Senior Notes due 2017. Additionally, proceeds will be used to repay amounts drawn on its revolving credit facility and for general corporate purposes, potentially including further debt reduction. This move suggests a focus on optimizing the company's capital structure and potentially lowering its overall interest expense.

Key Highlights

  • 1Fiserv issued $1.75 billion in new senior notes: $850 million due 2020 at 2.700% and $900 million due 2025 at 3.850%.
  • 2The proceeds will be used primarily to redeem existing debt, specifically the 3.125% Senior Notes due 2016 and the 6.8% Senior Notes due 2017.
  • 3A portion of the proceeds will also be used to repay outstanding borrowings under Fiserv's revolving credit facility.
  • 4The company has flexibility to use any remaining net proceeds for general corporate purposes, including further debt repayment.
  • 5The new notes contain provisions for redemption at a 'make-whole' price before maturity, and at par thereafter, with specific dates outlined.
  • 6A 'change of control triggering event' provision requires Fiserv to offer to repurchase the notes at 101% of principal plus accrued interest.
  • 7The debt offering is part of Fiserv's strategy to manage its capital structure and potentially reduce interest expenses.

Frequently Asked Questions

The primary purpose of this debt issuance is to refinance existing debt. Fiserv intends to use the net proceeds to redeem its outstanding 3.125% Senior Notes due 2016 and 6.8% Senior Notes due 2017, and to repay borrowings under its revolving credit facility. This suggests a strategy to optimize the company's debt profile.

Fiserv issued $850 million in 2.700% Senior Notes due June 1, 2020, and $900 million in 3.850% Senior Notes due June 1, 2025. Interest is payable semi-annually. The interest rates are subject to adjustment based on debt rating agency actions.

In the event of a 'change of control triggering event,' Fiserv is obligated to offer to repurchase the new notes at 101% of their aggregate principal amount, plus any accrued and unpaid interest. This provides some protection to noteholders in such scenarios.

By refinancing older, higher-interest debt and drawing on its credit facility, Fiserv is managing its current debt obligations. The proceeds are being used to retire specific liabilities and for general corporate purposes, which may include further debt reduction, indicating active capital structure management and potentially freeing up cash flow for other strategic initiatives.