Affiliated Computer receives disputed acceleration notice on 5.2% notes

By Caroline Salls

Pittsburgh, Oct. 4 - Affiliated Computer Services, Inc. received a notice of acceleration of its 5.20% senior notes due 2015 for failure to file its 10-K annual report by Sept. 28, according to an 8-K filing with the Securities and Exchange Commission.

Affiliated Computer said it believes that no default or acceleration has occurred under the notes' indenture.

The company has filed a lawsuit against indenture trustee Bank of New York, NA in the U.S. District Court for the Northern District of Texas seeking a declaratory judgment affirming the company's position on the default.

Until a final judgment is reached in the lawsuit, Affiliated said no legally enforceable determination can be made as to whether the failure to file the 10-K constitutes a default under the indenture.

The company said its 4.70% senior notes due 2010 were issued under the same indenture and have identical default and acceleration provisions as the 5.20% senior notes.

As of Sept. 30, the outstanding balance under the 5.20% notes was $254.3 million, including $4.3 million of interest, and the outstanding balance under the 4.70% notes was $253.9 million, including $3.9 million of interest.

As previously reported, the company has received an amendment, consent and waiver from the lenders under its credit agreement that waives any event of default arising from the failure to comply with reporting covenants, including covenants requiring the filing of reports with either the Securities and Exchange Commission or debtholders, as long as the filing requirements are met by Dec. 31.

Affiliated Computer is a Dallas-based provider of business process outsourcing and information technology services.

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