SS&C Covenants Tear Sheet, Debt Documents Summaries
SS&C Covenants Debt Documents
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SS&C Technologies Holdings Inc., trading on Nasdaq under SSNC and headquartered in Windsor, Conn., is a hedge fund and private equity administrator as well as a mutual fund transfer agent. Its business model combines software and services in the financial services and healthcare industries. This includes owning and operating technology across securities accounting, front-to-back-office operations, performance and risk analytics, regulatory reporting, and healthcare information processes.
All debt resides at its operating company, SS&C Technologies Inc. (“SS&C”), or other subsidiaries, including foreign subsidiaries organized in Luxembourg. SS&C is a co-borrower, along with domestic and foreign subsidiaries, under a senior secured credit facility that consists of a $250 million revolver and $4.87 billion outstanding in three tranches of term B loans. The company is also the issuer of $2 billion of a single series of 5.5% senior notes due 2027.
The credit facility is secured and guaranteed by SS&C Technologies Holdings Inc., as well as existing and future wholly owned domestic restricted subsidiaries, subject to customary exceptions. The foreign obligations of the credit facility represented by the term B-4 loan tranche is guaranteed by the U.S. guarantors and also benefits from guarantees from wholly owned foreign restricted subsidiaries. The senior notes are unsecured and guaranteed by wholly owned domestic restricted subsidiaries that guarantee the credit facilities and non-wholly-owned domestic restricted subsidiaries that guarantee certain debt of members of the restricted group.
In January, SS&C and its lenders amended the credit agreement to lower the pricing of the term loans.
The company’s capital structure as of Sept. 30 is as follows:
Liquidity and financial covenant
- Liquidity as of Sept. 30 was $431 million. The credit agreement contains a requirement to maintain a net secured leverage ratio, which is currently set at 6.75x; SS&C’s net secured leverage ratio was 2.51x as of Sept. 30.
Debt and liens
- We estimate that SS&C can incur $10.41 billion in additional debt, $6.29 billion of which can be secured and only $100 million of which can be structurally senior.
Restricted payments, investments and prepayments
- The credit agreement limits restricted payments to $100 million annually, subject to meeting a 4.5x net debt ratio, which the company was able to meet as of Sept. 30. Investments in unrestricted subsidiaries are capped at $125 million. The credit agreement’s prepayment covenant applies only to debt subordinated in right of payment and, accordingly, does not prevent SS&C from purchasing or prepaying the senior notes. The senior notes themselves limit only the company’s ability to prepay payment subordinated debt.
--Richard Barbour II