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

Long-term debt as of June 30, 2018 and December 31, 2017 consists of:


(in thousands)	June 30, 2018		December 31, 2017
3.800% Senior Notes due April 1, 2021 (5 year tranche), net of discount and debt issuance costs	$	745,708	745,000
4.800% Senior Notes due April 1, 2026 (10 year tranche), net of discount and debt issuance costs		743,384	743,042
2.375% Senior Notes due June 1, 2018 (5 year tranche), net of discount and debt issuance costs		-	549,532
3.750% Senior Notes due June 1, 2023 (10 year tranche), net of discount and debt issuance costs		545,210	544,780
4.000% Senior Notes due June 1, 2023 (5 year tranche), net of discount and debt issuance costs		545,394	-
4.450% Senior Notes due June 1, 2028 (10 year tranche), net of discount and debt issuance costs		445,261	-
LIBOR + 1.500%, unsecured term facility, due February 23, 2021, with quarterly principal and interest payments, net of debt issuance costs		-	368,645
LIBOR + 1.300%, unsecured revolving loan, due February 23, 2021, with monthly interest payments on outstanding balances		-	200,000
LIBOR + 1.300%, unsecured revolving loan, due April 23, 2023, with monthly interest payments on outstanding balances		980,000	-
3.760% note payable due March 20, 2020, with monthly interest and principal payments		22,816	-
Total debt		4,027,773	3,150,999
Less current portion		(12,854)	(559,050)
Noncurrent portion of long-term debt	$	4,014,919	2,591,949

Senior Notes

On May 11, 2018, TSYS closed its sale (the “Transaction”) of $550 million aggregate principal amount of 4.000% Senior Notes due 2023 and $450 million aggregate principal amount of 4.450% Senior Notes due 2028 (collectively, the “Notes”) pursuant to an underwriting agreement, dated May 9, 2018 (the “Underwriting Agreement”), with Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities LLC, as representatives of the underwriters (the “Underwriters”), whereby the Company agreed to sell and the Underwriters agreed to purchase the Notes from the Company, subject to and upon the terms and conditions set forth in the Underwriting Agreement. The Company used the net proceeds of the Transaction to repay (i) all of its outstanding 2.375% Senior Notes due June 1, 2018 at maturity, (ii) all of its remaining outstanding indebtedness under that certain credit agreement dated January 10, 2018, among the Company and Bank of America, N.A., as administrative agent and the lenders party thereto, as amended and (iii) with any remaining amounts, a portion of the $1.34 billion outstanding under that certain Credit Agreement dated April 23, 2018, among the Company and Bank of America, N.A., as Administrative Agent and L/C Issuer, JPMorgan Chase Bank, N.A., as Syndication Agent, and the lenders party thereto. The Notes were issued pursuant to a Senior Indenture, dated as of March 17, 2016, between the Company and Regions Bank, as trustee.

Senior Credit Facility

On April 23, 2018, TSYS entered into a Credit Agreement with Bank of America, N.A., as Administrative Agent and letter of credit issuer. 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.

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 LIBOR, in each case plus a margin based on the Company’s corporate credit ratings.

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 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 was in compliance with all applicable financial covenants as of June 30, 2018.

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). As discussed above, the remaining balance of the Term Loan Facility was paid off in June 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:


	Six months ended June 30, 2018
(in thousands)	Borrowings		Capital lease obligations		License agreements		Total
Additional borrowings	$	3,502,955		7,382		3,416	$	3,513,753
Principal payments		2,620,139		5,372		1,024		2,626,535