LINE OF CREDIT AND TERM LOAN

6 Months Ended

Jun. 30, 2014

10.

LINE OF CREDIT AND TERM LOAN

On May 23, 2013, Syntel entered into a Credit Agreement with Bank of America, N.A. for $150 million in credit facilities consisting of a three-year term loan facility of $60 million and a three-year revolving credit facility of $90 million. The maturity date of both the three year term loan facility and the three year revolving credit facility is May 23, 2016. The Credit Agreement is guaranteed by two of the Company’s domestic subsidiaries, SkillBay and Syntel Consulting (collectively, the “Guarantors”). In connection with the credit facilities, the Company and the Guarantors also entered into a related security and pledge agreement granting a security interest in the assets of the Company and the Guarantors, including, without limitation, a pledge of 65% of the equity interests in Syntel India.

The interest rates applicable to the loans incurred under the Credit Agreement are (a) with respect to Revolving Loans, (i) the Eurodollar Rate plus 1.25% with respect to Eurodollar Loans and (ii) the Base Rate plus 0.25% with respect to Base Rate Loans, and (b) with respect to the Term Loan, (i) the Eurodollar Rate plus 1.50% with respect to Eurodollar Loans and (ii) the Base Rate plus 0.50% with respect to Base Rate Loans (each as defined in the Credit Agreement).

As of June 30, 2014, the interest rate was 1.477350% for the three year revolving credit facility and was 1.727350% for the three year term loan facility.

With the interest rate charged on the credit facilities being variable, the fair value of the credit facilities approximate their reported value as of June 30, 2014, as it reflects the current market value.

Principal payments on the term loan are due every quarter. During the three months ended June 30, 2014, a principal payment of $ 1.875 million was made. The related Credit Agreement requires compliance with certain financial ratios and covenants. As of June 30, 2014, the Company was in compliance with all debt covenants.

As of June 30, 2014 the outstanding balances of the term loan and three-year revolving credit facilities including interest were $52.22 million and $90.14 million, respectively.

Future scheduled payments on the three-year revolving credit facility and term loan, at June 30, 2014 are as follows:


	Term Loan		Revolving Credit
	Term Loan		Facility
	(In thousands)
2014	$	3,750	$	—
2015	$	8,625	$	—
2016	$	39,750	$	90,000

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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