Evertec expects debt ratio to spike to 3x from 0.9x due to Sinqia buy

By Devika Patel

Knoxville, Tenn., July 24 – Evertec Inc. plans to increase its leverage ratio to almost 3x from 0.9x as of last quarter due to approximately $600 million of committed financing the company has secured to acquire Sinqia SA, a Brazil-based provider of technology for financial institutions.

“We plan to finance this transaction with cash on hand and committed financing of approximately $600 million and we expect this would raise our debt ratio from 0.9x as of last quarter to almost 3x, which is within our target debt ratio of 2x to 3x adjusted EBITDA,” chief financial officer Joaquín Castrillo said on the company’s conference call announcing the acquisition on July 21.

As previously reported, the company has received a commitment for $600 million in one or more incremental term B loans to help fund the acquisition.

Truist Securities Inc. provided the debt commitment.

Under the agreement, Sinqia is being purchased for R$27.19 per share, increased by a customary daily “ticking fee” of up to R$1.00 per share depending on the timing of the closing, subject to certain limited exceptions. Consideration will be in the form of 90% cash and 10% Evertec shares.

Based on the closing price of Sinqia shares on July 19, Sinqia has an equity valuation of R$2.326 billion (U.S. $485 million) and an enterprise value of R$2.835 billion (U.S. $591 million).

Closing is expected in the fourth quarter, subject to satisfaction of customary conditions and approvals.

Evertec is a Puerto Rico-based full-service transaction processing company.

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