Total System Services enters $200 million five-year term loan

By Marisa Wong

Madison, Wis., April 11 - Total System Services, Inc. entered into a credit agreement providing for a $200 million five-year term loan, according to an 8-K filed Thursday with the Securities and Exchange Commission.

The credit agreement was completed on April 8 with JPMorgan Chase Bank, NA as administrative agent, Bank of Tokyo-Mitsubishi UFJ, Ltd. as syndication agent, Regions Bank and U.S. Bank NA as documentation agents and J.P. Morgan Securities LLC, Bank of Tokyo Mitsubishi UFJ, Regions Capital Markets and U.S. Bank as joint lead arrangers and joint bookrunners.

The term loan will be funded upon completion of Total System's previously announced acquisition of NetSpend Holdings, Inc. and will be used to pay a portion of the $1.4 billion purchase price. The acquisition is expected to close mid-year.

When the companies entered into the merger agreement on Feb. 19, Total System obtained commitments for a $1.2 billion 364-day bridge term loan facility from JPMorgan Chase Bank, J.P. Morgan Securities and Bank of Tokyo-Mitsubishi UFJ.

Upon entering into the new credit agreement, total commitments under the bridge loan were reduced by the amount of the term loan to $1 billion.

Interest on the term loan will be Libor plus an applicable margin of 100 basis points to 175 bps, depending on the company's credit ratings. Based on current ratings, the applicable margin would be 112.5 bps.

The company will pay a commitment fee of 17.5 bps to 22.5 bps, depending on credit ratings, until the term loan is funded or the commitments are terminated or expire on Oct. 31, 2013.

The credit agreement contains some restrictive covenants as well as financial covenants, including a maximum consolidated leverage ratio of 3 times and minimum consolidated fixed-charge coverage ratio of 2.5 times.

According to the filing, on April 8 the company also amended its credit agreement dated Sept. 10, 2012 to conform some provisions of the existing credit agreement to those of the new credit agreement for the term loan.

The existing facility consists of a $350 million five-year revolving credit facility and a $150 million five-year term loan.

Total System is a Columbus, Ga.-based payment services provider. NetSpend is an Austin, Texas-based provider of general purpose reloadable prepaid debit cards and related financial services to underbanked consumers.

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