Line of Credit and Term Loan

12 Months Ended

Dec. 31, 2014

7. Line of Credit and Term Loan

As at December 31, 2012, the Company had a line of credit with JPMorgan Chase Bank NA, which provided for borrowings up to $50.0 million and a maturity date of December 31, 2013. The interest was payable to the bank on the outstanding and unpaid principal amount of each Commercial Bank Floating Rate advance at the Commercial Bank Floating Rate plus the applicable margin and each LIBOR rate advance at the adjusted LIBOR rate of 1.71% at December 31, 2012.

Syntel, Inc., Syntel Consulting, Inc. and SkillBay LLC (the “Grantors”) had granted to the Bank a continuing security interest in all property of the Grantors specifically excluding all stock of any Syntel foreign subsidiary and all assets owned directly by any Syntel foreign subsidiary.

The above utilized Line of Credit with JPMorgan Chase Bank NA of $50 million was repaid in full on May 23, 2013.

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 three year term loan facility and 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 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 December 31, 2014, the interest rate was 1.482900 % for the three year revolving credit facility and was 1.732900 % 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 December 31, 2014, as it reflects the current market value.

Principal payments on the term loan are due every quarter and during the year ended December 31, 2014, principal payments of $7.13 million were made. The related Credit Agreement requires compliance with certain financial ratios and covenants. As of December 31, 2014, the Company was in compliance with all debt covenants.

As at December 31, 2014 the outstanding balance of term loan and line of credit including interest was $90.14 million and $48.46 million, respectively.

Future scheduled payments on the line of credit and term loan are as follows:


	(In thousands)

2015	$	8,625
2016	$	129,750

- 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.

+ References+ Details