ITEM 1.01
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Entry into a Material Definitive Agreement.
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On April 23, 2018, Total System Services, Inc. (the
Company) entered into a Credit Agreement (the Credit Agreement) with Bank of America, N.A., as Administrative Agent and L/C Issuer, JPMorgan Chase Bank, N.A., as Syndication Agent, MUFG Bank, Ltd., Capital One, N.A., Regions
Bank, SunTrust Bank, TD Bank, N.A., U.S. Bank National Association and Wells Fargo Bank, National Association, as
Co-Documentation
Agents, and the other lenders party thereto, with Bank of America Merrill
Lynch and JPMorgan Chase Bank, N.A., MUFG Bank, Ltd., Capital One, N.A., Regions Bank, SunTrust Robinson Humphrey, Inc., TD Securities (USA) LLC, U.S. Bank National Association and Wells Fargo Securities, LLC as joint lead arrangers and joint
bookrunners. The Credit Agreement provides the Company with a $1.75 billion five-year revolving senior credit facility, which includes a $50 million
sub-facility
for the issuance of standby letters
of credit.
The Credit Agreement was used to repay (i) in full, borrowings under that certain Credit Agreement dated February 23, 2016, among
the Company, JPMorgan Chase Bank, N.A., as administrative agent and the lenders party thereto, as amended, and (ii) in part, borrowings under that certain Credit Agreement dated January 10, 2018, among the Company and Bank of America as
administrative agent and the lenders party thereto, as amended. In addition, amounts from the Credit Agreement will be available for working capital and other general corporate purposes, including to finance acquisitions and the repurchase by the
Company of the Companys capital stock.
Borrowings under the Credit Agreement will accrue interest at either the base rate (as defined in the Credit
Agreement) or, for certain euro-denominated borrowings, the London Interbank Offered Rate (LIBOR), in each case plus a margin based on the Companys corporate credit ratings. The applicable margin for loans bearing interest based on
LIBOR ranges from 0.900% to 1.500%. The applicable margin for loans bearing interest based on the base rate ranges from 0.000% to 0.500%.
The Credit
Agreement contains customary covenants regarding, among other matters, the maintenance of insurance, the preservation and maintenance of the Companys corporate existence, material compliance with laws and the payment of taxes and other
material obligations. The Credit Agreement also contains financial covenants including (i) a minimum consolidated fixed charge coverage ratio (the Minimum Fixed Charge Coverage Ratio) of 2.5 to 1.0 and (ii) a maximum
consolidated leverage ratio (Maximum Leverage Ratio) (x) of 4.00 to 1.0, for the fiscal quarter ending June 30, 2018, (y) of 3.75 to 1.0, for each of the fiscal quarters ending September 30, 2018, December 31, 2018 and
March 31, 2019, and (z) of 3.50 to 1.0, for any fiscal quarter ending thereafter. The Company has the option to increase the Maximum Leverage Ratio by 0.5x up to two times in connection with a qualified acquisition, subject to the terms
and conditions contained in the Credit Agreement. The Minimum Fixed Charge Coverage Ratio and Maximum Leverage Ratio are computed at the end of each fiscal quarter. In addition, the Credit Agreement contains covenants which, among other things,
restrict the ability of the Company and the Companys subsidiaries (subject to exceptions and thresholds), to:
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grant or permit liens on our or their assets;
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make certain investments, acquisitions or loans;
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merge, consolidate or otherwise dispose of assets other than in the ordinary course of business;
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pay dividends or make other restricted payments;
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make material changes in our lines of business; and
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enter into transactions with our or their affiliates.
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The Credit Agreement includes customary events of
default (subject to specified cure periods, materiality qualifiers and exceptions), including the failure to pay any interest, principal or fees when due, the failure to perform or the violation of any covenant contained in the Credit Agreement, the
making of materially inaccurate or false representations or warranties, a default on certain material indebtedness, insolvency or bankruptcy, a change of control, the occurrence of material ERISA events and certain judgments against the Company or
its material subsidiaries.
This description of the Credit Agreement is qualified in its entirety by reference to the complete terms and
conditions of the Credit Agreement, which is attached as Exhibit 10.1 to this Current Report on Form
8-K
and is incorporated herein by reference.