8-KMaterial AgreementsFinancial Events

GLOBAL PAYMENTS INC 8-K Report, Material Agreement (Nov 1, 2016)

Filed November 1, 2016For Securities:GPN

Summary

GLOBAL PAYMENTS INC (GPN) filed an 8-K on November 1, 2016, to report a material definitive agreement: the Second Amendment to its Amended Credit Facility Agreement. This amendment, entered into on October 31, 2016, effectively increased the Company's total financing capacity under its credit facilities from $4.78 billion to $5.03 billion. Notably, while the total capacity expanded, the Company's aggregate outstanding debt did not change, as it simultaneously repaid certain outstanding amounts under its revolving credit facility. This strategic financial maneuver provides GPN with enhanced financial flexibility. The Second Amendment details modifications to the terms of the credit facilities, including interest rate structures and maturity dates. The revolving credit facility and two term loan facilities (Term Loan A and Term Loan A-2) now have a maturity of five years from the date of the Second Amendment, while the Term Loan B facility matures in April 2023. The interest rate spreads are tied to the Company's leverage ratio, offering potential cost savings as the company's financial health improves. The agreement also includes standard covenants and events of default, common in such debt arrangements.

Key Highlights

  • 1Global Payments Inc. entered into a Second Amendment to its Amended Credit Facility Agreement on October 31, 2016.
  • 2The amendment increased the total financing capacity of the credit facilities from $4.78 billion to $5.03 billion.
  • 3The Company repaid certain outstanding revolving credit facility amounts concurrently with the Second Amendment, keeping aggregate outstanding debt unchanged.
  • 4The revolving credit facility and Term Loan A/A-2 facilities now mature five years from the date of the Second Amendment.
  • 5Term Loan B facility matures on April 22, 2023.
  • 6Interest rates on new borrowings are variable, based on a base rate plus a margin dependent on the Company's leverage ratio.
  • 7The agreement includes customary affirmative and restrictive covenants, including financial covenants related to leverage and fixed charge coverage ratios.

Frequently Asked Questions

The primary purpose of the Second Amendment was to increase Global Payments' total financing capacity by $250 million, bringing it to $5.03 billion. This provides the company with greater financial flexibility for operations, strategic initiatives, or potential future acquisitions.

No, despite the increase in total financing capacity, the Company's aggregate outstanding debt under the Amended Credit Facility Agreement did not change. This is because Global Payments simultaneously repaid certain outstanding amounts under its revolving credit facility in connection with the Second Amendment.

The interest rates are variable and depend on the type of loan (Base Rate Loan or Eurocurrency Loan) and the Company's leverage ratio. For the Term Loan A, Term Loan A-2, and Revolving Credit Facility, the margin ranges from 0.5% to 1.25% for Base Rate Loans and 1.50% to 2.25% for Eurocurrency Loans. The Term Loan B facility has fixed margins of 1.50% for Base Rate Loans and 2.50% for Eurocurrency Loans.

The Revolving Credit Facility and the Term Loan A and Term Loan A-2 facilities will mature on the 5-year anniversary of the Second Amendment. The Term Loan B facility has a maturity date of April 22, 2023.