8-KMaterial AgreementsFinancial EventsExhibits & Filings

GLOBAL PAYMENTS INC 8-K Report, Material Agreement (Jul 14, 2009)

Filed July 14, 2009For Securities:GPN

Summary

This Form 8-K filing from Global Payments Inc. (GPN) dated July 14, 2009, reports on the entry into a new $300 million unsecured three-year term loan credit agreement on July 10, 2009. The primary purpose of this new financing is to repay the outstanding balance on the company's existing $350 million revolving credit facility. This revolving credit facility was previously utilized to fund the acquisition of the remaining 49% ownership interest in HSBC Merchant Services LLP. This transaction indicates a strategic financial maneuver by Global Payments to secure longer-term, unsecured financing and manage its debt structure following a significant acquisition. Investors should note the change in financing structure, the variable interest rate tied to LIBOR and leverage, and the direct link between this new loan and the recent completion of the HSBC Merchant Services LLP acquisition. The company's ability to secure unsecured debt suggests financial stability and confidence from lenders.

Key Highlights

  • 1Global Payments Inc. entered into a new $300 million unsecured three-year term loan credit agreement on July 10, 2009.
  • 2The proceeds from the new term loan will be used to pay down the existing $350 million revolving credit facility.
  • 3The revolving credit facility was previously used to finance the acquisition of the remaining 49% ownership of HSBC Merchant Services LLP.
  • 4The term loan features a variable interest rate based on LIBOR plus an applicable margin that adjusts with the company's leverage.
  • 5The new loan is unsecured, suggesting a level of financial strength and confidence from the lending syndicate.
  • 6This filing signifies a refinancing effort to manage debt post-acquisition and potentially extend the company's debt maturity profile.
  • 7The filing was made on July 14, 2009, with the earliest event reported being July 10, 2009.

Frequently Asked Questions

The main purpose of the new $300 million term loan is to repay the outstanding balance of Global Payments Inc.'s existing $350 million revolving credit facility. This facility was recently used to fund the acquisition of the remaining 49% ownership in HSBC Merchant Services LLP.

This new loan is a $300 million, unsecured, three-year term loan. It carries a variable interest rate based on the London Interbank Offered Rate (LIBOR) plus an applicable margin that can change depending on the company's leverage position.

The new $300 million term loan is directly linked to the acquisition. The company used its $350 million revolving credit facility to finance the purchase of the remaining 49% of HSBC Merchant Services LLP. This new term loan is intended to pay down the debt incurred on that revolving credit facility.

An unsecured loan means that the loan is not backed by any specific collateral. This typically indicates that lenders have a high degree of confidence in the borrower's creditworthiness and ability to repay the debt based on its general financial standing and cash flows.