Total System Services enters five-year $1.5 billion credit agreement

By Wendy Van Sickle

Columbus, Ohio, Feb. 23 – Total System Services, Inc. entered into a $1.5 billion five-year credit agreement on Tuesday, according to an 8-K filing with the Securities and Exchange Commission.

The agreement provides for an $800 million unsecured revolving credit facility and a $700 million term loan facility, consisting of a $300 million term loan funded immediately to repay the company’s existing credit facility and a $400 million delayed-draw term loan.

The revolver has a $50 million sub-facility for the issuance of standby letters of credit.

J.P. Morgan Securities LLC, Bank of America Merrill Lynch, MUFG, U.S. Bank NA and Wells Fargo Securities, LLC acted as joint lead arrangers and joint bookrunners; MUFG, U.S. Bank and Wells Fargo Bank, NA as co-documentation agents; Bank of America as syndication agent; and JPMorgan Chase Bank, NA as administrative agent.

Borrowings will accrue interest at Libor plus a margin based on the company’s corporate credit ratings. The margin ranges from 90 basis points to 150 bps for revolving loans and 100 bps to 175 bps for term loans.

The revolver and delayed-draw term loan have commitment fees ranging from 10 bps to 25 bps, depending on credit ratings.

The company fully repaid its credit agreement dated Sept. 10, 2012 with JPMorgan Chase as administrative agent with the $300 million refinancing term loan.

The delayed-draw term loan will be available to fund part of Total System’s acquisition of all the outstanding capital stock of TransFirst Holdings Corp. The revolver will be used for working capital and general corporate purposes, including to also partly fund the TransFirst acquisition, which was announced Jan. 26.

Under a previously reported purchase agreement, Total System will acquire TransFirst for $2.35 billion in cash less net debt of TransFirst as of the closing. Either party may terminate the agreement if closing has not occurred by July 24.

In connection with the new credit facility, a 364-day bridge facility obtained on Jan. 26 by Total System for the acquisition was reduced to $1.15 billion from $2 billion, the difference being the sum of the delayed-draw term loan and $450 million of the revolver.

JPMorgan Chase Bank, BofA Merrill Lynch, U.S. Bank and Wells Fargo Securities were the lead arrangers of the bridge facility and JPMorgan Chase the administrative agent.

The new credit agreement requires Total System to maintain a minimum fixed charge coverage ratio of 2.5 times and a maximum consolidated leverage ratio of 3.5 times, which will increase to 4.25 times after the acquisition, stepping back down to 3.5 times over time.

Total Systems Services is a payment solutions provider based in Columbus, Ga. TransFirst is a Hauppauge, N.Y.-based provider of transaction processing services and payment enabling technologies.

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