FIS Announces Pricing Terms of its Senior Note Tender Offers
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Insights
The announcement by Fidelity National Information Services (FIS) regarding the pricing terms of its tender offer for certain outstanding senior notes is a strategic financial maneuver that may influence the company's debt structure and interest expense. The repurchase of debt, particularly when targeting notes with varying maturity dates and interest rates, can optimize the company's capital structure and potentially lead to interest cost savings.
From a financial analysis perspective, the decision to buy back debt could be indicative of FIS's internal assessment that its notes are trading at a favorable price, or it could be a proactive step to manage the company's leverage and interest rate exposure. The tender offer's structure, with its tiered acceptance priority levels, suggests a calculated approach to debt management, prioritizing certain maturities and rates over others.
For investors and stakeholders, this move could signal FIS's confidence in its liquidity and balance sheet strength. It's also critical to consider the implied interest rate trends and the potential impact on FIS's cost of capital. The fixed spreads over reference yields provide insight into the premium FIS is willing to pay over the risk-free rate, which in turn affects the overall attractiveness of the offer to debt holders. The timing and execution of such financial strategies are essential, especially in light of prevailing market interest rates and the company's future capital needs.
Examining the tender offer by FIS in the context of the broader debt market reveals several implications. The offered consideration for each note series reflects the current interest rate environment and the credit spread FIS commands in the market. The reference yields and fixed spreads above these yields are particularly noteworthy, as they provide a benchmark for evaluating the company's creditworthiness and the market's perception of its risk.
Furthermore, the tender offer's impact on the secondary market for FIS's notes is a point of interest. A successful tender offer may lead to reduced liquidity for the affected note series, as a significant portion of these securities would be retired. This could potentially impact the pricing and trading dynamics for the remaining notes in circulation.
For market participants, the tender offer details, such as the total consideration and acceptance priority levels, are critical for making informed decisions. The offer's structure could also influence the pricing strategy for FIS's future debt issuances, as current and potential investors will scrutinize the company's approach to managing its outstanding debt obligations.
The strategic use of tender offers as seen by FIS reflects broader economic principles, such as the cost of debt capital and the signaling effect to the market. By repurchasing its higher-interest or near-maturity debt, FIS may be attempting to reduce its future interest obligations, which is a prudent move in an environment where interest rates might rise, increasing the cost of borrowing.
The company's decision to repurchase its debt could also be interpreted as a signal of its economic outlook and operational performance. A firm that buys back debt might be perceived as financially stable and expecting strong cash flows, which can be reassuring for investors, especially during periods of economic uncertainty.
It is also important to consider the macroeconomic context, such as inflation rates, monetary policy and economic growth forecasts, as these factors can influence corporate finance decisions. The tender offer could be a response to these macroeconomic conditions, with FIS aiming to lock in lower interest rates before potential hikes or to adjust its debt profile in anticipation of changes in the economic cycle.
The Offers are made upon the terms and subject to the conditions set forth in the Offer to Purchase dated February 27, 2024 relating to the Notes (the “Offer to Purchase”) and the accompanying notice of guaranteed delivery (the “Notice of Guaranteed Delivery” and, together with the Offer to Purchase, the “Tender Offer Documents”). Capitalized terms used but not defined in this announcement have the meanings given to them in the Offer to Purchase.
Set forth in the table below is the applicable Total Consideration for each series of Notes, as calculated as of 10:00 a.m. (Eastern time) today, March 4, 2024, in accordance with the Offer to Purchase.
Acceptance Priority Level(1) |
Title of Security |
CUSIP/ISIN |
Par Call Date(2) |
Maturity Date |
Principal Amount Outstanding
|
Interpolated Rate |
Reference Security(3) |
Reference Yield |
Fixed Spread(3) |
Total Consideration(2) (3) |
|
1 |
|
31620MBH8/
|
02/21/2031 |
05/21/2031 |
|
N/A |
UKT |
|
+65 bps |
|
|
2 |
|
31620MBN5/
|
09/03/2029 |
12/03/2029 |
|
N/A |
UKT |
|
+45 bps |
|
|
3 |
|
31620MBJ4/ US31620MBJ45 |
02/21/2029 |
05/21/2029 |
|
N/A |
UST |
|
+35 bps |
|
|
4 |
|
31620MBT2/ US31620MBT27 |
12/01/2030 |
03/01/2031 |
|
N/A |
UST |
|
+70 bps |
|
|
5 |
|
31620MBV7/ US31620MBV72 |
N/A |
07/15/2025 |
|
N/A |
UST |
|
+25 bps |
|
|
6 |
|
31620MBW5/
|
06/15/2027 |
07/15/2027 |
|
N/A |
UST |
|
+45 bps |
|
|
7 |
|
31620MBZ8/
|
01/15/2052 |
07/15/2052 |
|
N/A |
UST |
|
+110 bps |
|
|
8 |
|
31620MAZ9/ US31620MAZ95 |
11/15/2047 |
05/15/2048 |
|
N/A |
UST |
|
+140 bps |
|
|
9 |
|
31620MAU0/
|
02/15/2046 |
08/15/2046 |
|
N/A |
UST |
|
+125 bps |
|
|
10 |
|
31620MBF2/
|
02/21/2039 |
05/21/2039 |
|
May 2039 Interpolated Rate |
N/A |
|
+80 bps |
|
|
11 |
|
31620MBY1/
|
04/15/2032 |
07/15/2032 |
|
N/A |
UST |
|
+70 bps |
|
|
12 |
|
31620MAY2/ US31620MAY21 |
02/15/2028 |
05/15/2028 |
|
N/A |
UST |
|
+95 bps |
|
|
13 |
|
31620MBU9/
|
09/01/2040 |
03/01/2041 |
|
N/A |
UST |
|
+105 bps |
|
|
14 |
|
31620MBE5/
|
02/21/2030 |
05/21/2030 |
|
May 2030 Interpolated Rate |
N/A |
|
+80 bps |
|
|
|
(1) |
Subject to the satisfaction or waiver of the conditions of the Offers described in the Offer to Purchase, if the Maximum Purchase Condition is not satisfied with respect to every series of Notes, FIS will accept Notes for purchase in the order of their respective Acceptance Priority Level specified in the table above (with 1 being the highest Acceptance Priority Level and 14 being the lowest Acceptance Priority Level). It is possible that a series of Notes with a particular Acceptance Priority Level will not be accepted for purchase even if one or more series with a higher or lower Acceptance Priority Level are accepted for purchase. |
|
(2) |
For each series of Notes in respect of which a par call date is indicated, the calculation of the applicable Total Consideration (as defined below) has been performed taking into account such par call date. |
|
(3) |
The Total Consideration for each series of Notes (such consideration, the “Total Consideration”) payable per each |
The Notes denominated in
For Holders who deliver a Notice of Guaranteed Delivery and all other required documentation at or prior to the Expiration Date, upon the terms and subject to the conditions set forth in the Tender Offer Documents, the deadline to validly tender Notes using the Guaranteed Delivery Procedures (as defined in the Offer to Purchase) will be the second business day after the Expiration Date and is expected to be 5:00 p.m. (Eastern time) on March 6, 2024, unless extended with respect to any Offer (the “Guaranteed Delivery Date”).
The Initial Settlement Date will be the third business day after the Expiration Date and is expected to be March 7, 2024. The Guaranteed Delivery Settlement Date will be the second business day after the Guaranteed Delivery Date and is expected to be March 8, 2024. Each of the Initial Settlement Date and the Guaranteed Delivery Settlement Date is herein referred to as a “Settlement Date.”
Upon the terms and subject to the conditions set forth in the Offer to Purchase, Holders whose Notes are accepted for purchase in the Offers will receive the applicable Total Consideration for each
In addition to the applicable Total Consideration, Holders whose Notes are accepted for purchase will receive a cash payment equal to the accrued and unpaid interest on such Notes from and including the immediately preceding interest payment date for such Notes to, but excluding, the Initial Settlement Date (the “Accrued Coupon Payment”). Interest will cease to accrue on the Initial Settlement Date for all Notes accepted in the Offers, and Holders whose Notes are tendered pursuant to the Guaranteed Delivery Procedures and are accepted for purchase will not receive payment in respect of any interest for the period from and including the Initial Settlement Date. Under no circumstances will any interest be payable because of any delay in the transmission of funds to Holders by any Clearing System or its participants.
The Offers are subject to the satisfaction of certain conditions as described in the Offer to Purchase. FIS reserves the right, subject to applicable law, to waive any and all conditions to any Offer. If any of the conditions is not satisfied, FIS is not obligated to accept for payment, purchase or pay for, and may delay the acceptance for payment of, any tendered notes, in each event subject to applicable laws, and may terminate or alter any or all of the Offers. The Offers are not conditioned on the tender of any aggregate minimum principal amount of Notes of any series (subject to minimum denomination requirements as set forth in the Offer to Purchase).
FIS has retained Citigroup Global Markets Inc., J.P. Morgan Securities LLC, J.P. Morgan Securities plc, MUFG Securities Americas Inc. and
D.F. King & Co, Inc. will act as the Information and Tender Agent for the Offers. Questions or requests for assistance related to the Offers or for additional copies of the Offer to Purchase may be directed to D.F. King & Co, Inc. in
If FIS terminates any Offer with respect to one or more series of Notes, it will give prompt notice to the Information and Tender Agent, and all Notes tendered pursuant to such terminated Offer will be returned promptly to the tendering Holders thereof. With effect from such termination, any Notes blocked in the applicable Clearing System will be released.
Holders are advised to check with any bank, securities broker or other intermediary through which they hold Notes as to when such intermediary would need to receive instructions from a beneficial owner in order for that Holder to be able to participate in, or withdraw their instruction to participate in the Offers before the deadlines specified herein and in the Offer to Purchase. The deadlines set by any such intermediary and the applicable Clearing System for the submission and withdrawal of tender instructions will also be earlier than the relevant deadlines specified herein and in the Offer to Purchase.
This announcement is for informational purposes only. This announcement is not an offer to purchase or a solicitation of an offer to sell any Notes or any other securities of the Company or any of its subsidiaries. The Offers are being made solely pursuant to the Offer to Purchase. The Offers are not being made to Holders of Notes in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. In any jurisdiction in which the securities laws or blue sky laws require the Offers to be made by a licensed broker or dealer, the Offers will be deemed to have been made on behalf of the Company by the dealer managers or one or more registered brokers or dealers that are licensed under the laws of such jurisdiction.
No action has been or will be taken in any jurisdiction that would permit the possession, circulation or distribution of either this announcement, the Offer to Purchase or any material relating to us or the Notes in any jurisdiction where action for that purpose is required. Accordingly, neither this announcement, the Offer to Purchase nor any other offering material or advertisements in connection with the Offers may be distributed or published, in or from any such country or jurisdiction, except in compliance with any applicable rules or regulations of any such country or jurisdiction.
FIS is a leading global provider of financial services technology solutions for financial institutions, businesses and developers. We improve the digital transformation of our financial economy, advancing the way the world pays, banks and invests. We provide the confidence made possible when reliability meets innovation, helping our clients run, grow and protect their business. Headquartered in
Forward-looking Statements
This news release contains forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements are based on management’s beliefs, as well as assumptions made by, and information currently available to, management. Because such statements are based on expectations as to future events and are not statements of fact, actual results may differ materially from those projected. FIS undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. The risks and uncertainties which forward-looking statements are subject to include, but are not limited to, the risks related to the acceptance of any tendered Notes, the expiration and settlement of the Offers, the satisfaction of conditions to the Offers, whether the Offers will be consummated in accordance with the terms set forth in the Offer to Purchase or at all and the timing of any of the foregoing, and other risks detailed in the “Statement Regarding Forward-Looking Information,” “Risk Factors” and other sections of FIS’ Form 10-K for the fiscal year ended December 31, 2023 and FIS’ other filings with the Securities and Exchange Commission.
Notice to Certain Non-
Neither this announcement nor the Offer to Purchase constitute an offer or an invitation by, or on behalf of, the Company or by, or on behalf of, the dealer managers to participate in the Offers in any jurisdiction in which it is unlawful to make such an offer or solicitation in such jurisdiction. The distribution of this announcement or the Offer to Purchase may be restricted by law in certain jurisdictions. Persons into whose possession this announcement or the Offer to Purchase come are required by the Company and the dealer managers to inform themselves about and to observe any such restrictions. This announcement or the Offer to Purchase may not be used for or in connection with an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it is unlawful to make such offer or solicitation.
The communication of this announcement, the Offer to Purchase and any other documents or materials relating to the Offers is not being made by, and such documents and/or materials have not been approved, by an authorized person for the purposes of section 21 of the Financial Services and Markets Act 2000, as amended. Accordingly, such documents and/or materials are not being distributed to, and must not be passed on to, the general public in the
The Offers are not being made, directly or indirectly, to the public in
The Offers do not constitute a public offering within the meaning of Articles 3, §1, 1° and 6, §1, of the Belgian Takeover Law. The Offers are exclusively conducted under applicable private placement exemptions and have therefore not been, and will not be, notified to, and neither this announcement, the Offer to Purchase nor any other document or material relating to the Offers have been, or will be, approved by the Belgian Financial Services and Markets Authority (Autorité des Services et Marchés Financiers/Autoriteit voor Financiële Diensten en Markten). Accordingly, the Offers, this announcement, the Offer to Purchase, any memorandum, information circular, brochure or any similar documents relating to the Offers may not be advertised, offered or distributed, directly or indirectly, to any person located and/or resident in
None of the Offers, this announcement, the Offer to Purchase or any other documents or materials relating to the Offers has been or will be submitted to the clearance procedure of the CONSOB, pursuant to applicable Italian laws and regulations.
The Offers are being carried out in
Holders or beneficial owners of the Notes that are a resident of and/or located in
Each intermediary must comply with the applicable laws and regulations concerning information duties vis-à-vis its clients in connection with the Notes or the Offers.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240304687772/en/
Fidelity National Information Services
Ellyn Raftery, 904.438.6083
Chief Marketing & Communications Officer
FIS Global Marketing & Corporate Communications
Ellyn.Raftery@fisglobal.com
or
George Mihalos, 904.438.6438
Senior Vice President
FIS Investor Relations
Georgios.Mihalos@fisglobal.com
Source: Fidelity National Information Services
FAQ
What is the purpose of FIS announcing the pricing terms for the Offers?
How are the Total Consideration amounts determined for each series of Notes?
What is the deadline for the Offers to purchase senior notes?
Who are the lead dealer managers for the Offers?