Long-term Borrowings, Capital Lease Obligations and License Agreements

3 Months Ended

Mar. 31, 2018

Long-term Borrowings, Capital Lease Obligations and License Agreements

Long-Term Borrowings, Capital Lease Obligations and License Agreements

Note 5 — Long-Term Borrowings, Capital Lease Obligations and License Agreements

Term Loan Facility

On January 10, 2018, TSYS entered into a credit agreement with Bank of America, N.A. as Administrative Agent and other lenders party thereto from time to time. The credit agreement provides the Company with a $450 million two-year term loan facility (“Term Loan Facility”).  The Term Loan Facility was used to finance, in part, the Company’s acquisition of Cayan Holdings LLC (“Cayan”).

Borrowings under the credit agreement will accrue interest at 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 Company’s corporate credit ratings. The applicable margin for loans bearing interest based on LIBOR ranges from 1.000% to 1.750%. The applicable margin for loans bearing interest based on the base rate ranges from 0.000% to 0.750%.  

The credit agreement contains customary covenants regarding, among other matters, the maintenance of insurance, the preservation and maintenance of the Company’s corporate existence, material compliance with laws and the payment of taxes and other material obligations. The credit agreement also contains financial covenants requiring the maintenance as of the end of each fiscal quarter of (i) a minimum fixed charge coverage ratio of 2.5 to 1.0 and (ii) a maximum consolidated leverage ratio of 3.5 to 1.0, which may be increased upon the occurrence of certain events (including the consummation of the acquisition of Cayan). The Company was in compliance with all applicable covenants as of March 31, 2018.

Refer to Note 11 of the Company’s audited financial statements for the year ended December 31, 2017, which is included as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC, for further discussion regarding long-term borrowings and capital lease obligations and license agreements.

Below is a summary of the Company’s borrowings and repayments on outstanding debt, capital lease obligations and license agreements:

	Three months ended March 31, 2018
(in thousands)	Borrowings		Capital lease obligations		License agreements		Total
Additional borrowings	$	1,065,955		6,818		3,416	$	1,076,189
Principal payments		125,000		3,553		457		129,010