ALLIANCE DATA SYSTEMS CORPORATION (NYSE:ADS) Files An 8-K Entry into a Material Definitive Agreement

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ALLIANCE DATA SYSTEMS CORPORATION (NYSE:ADS) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive Agreement.

General Information

On June 14, 2017, Alliance Data Systems Corporation (the
“Company”), and ADS Alliance Data Systems, Inc., ADS Foreign
Holdings, Inc., Alliance Data Foreign Holdings, Inc., Aspen
Marketing Services, LLC, Commission Junction LLC, Conversant LLC,
Epsilon Data Management, LLC, Comenity LLC and Comenity Servicing
LLC (collectively, the “Guarantors”) entered into an Amended
and Restated Credit Agreement with Wells Fargo Bank, National
Association (“Wells Fargo”), as Administrative Agent and Letter
of Credit Issuer, and various other agents and lenders (the
“2017 Credit Agreement”). to Section 2.16(a) of the 2017 Credit
Agreement, on June 16, 2017, the Company, the Guarantors, Wells
Fargo and various other lenders entered into a First Amendment to
Amended and Restated Credit Agreement and Incremental Amendment
(the “First Amendment”). Together, the 2017 Credit Agreement
and First Amendment provide for a $3,052,579,963.75 term loan and
a $1,572,420,036.25 revolving credit facility with a U.S.
$65,000,000 sublimit for Canadian Dollar borrowings and a
$65,000,000 sublimit for swing line loans. The 2017 Credit
Agreement includes an uncommitted accordion feature of up to
$750,000,000 (or, in certain circumstances, up to an amount of
additional debt that would not cause the Total Leverage Ratio (as
defined in the 2017 Credit Agreement) for the most recent four
consecutive fiscal quarter period to exceed 3:00 to 1:00 on a pro
forma basis) in the aggregate allowing for future incremental
borrowings, subject to certain conditions. At the closings of the
2017 Credit Agreement and the First Amendment, the Company
borrowed $3,421,977,754.11 in the aggregate, consisting of
$3,052,579,963.75 in term loans and $369,397,790.36 in revolving
credit loans. Proceeds from advances under the 2017 Credit
Agreement will be used to finance the general corporate and
working capital needs of the Company and its subsidiaries
including, without limitation, the refinancing of existing
indebtedness, stock repurchases, dividends, permitted
acquisitions, and capital expenditures. The 2017 Credit Agreement
refinanced and replaced in its entirety the Credit Agreement,
dated as of July 10, 2013, among the Company, certain
subsidiaries parties thereto as guarantors, Wells Fargo, as
Administrative Agent, and various other agents and lenders, as
amended from time to time (the “2013 Credit Agreement”).

The loans under the 2017 Credit Agreement are scheduled to mature
on June 14, 2022. The term loan provides for aggregate principal
payments equal to 2.5% of the initial term loan amount in each of
the first and second year and 5% of the initial term loan amount
in each of the third, fourth and fifth year of the term loan,
payable in equal quarterly installments beginning September 30,
2017. The 2017 Credit Agreement is unsecured.
Interest Rates and Fees

Advances under the 2017 Credit Agreement are in the form of
either U.S. dollar or Canadian dollar-denominated base rate loans
or U.S. dollar-denominated eurodollar loans. The interest rate
for base rate loans denominated in U.S. dollars fluctuates and is
equal to the highest of (i) Wells Fargo’s prime rate; (ii) the
Federal funds rate plus 0.5% and (iii) the rate per annum for a
one-month interest period as published by the ICE Benchmark
Administration Limited plus 1.0%, in each case plus a margin of
0.25% to 1.00% based upon the Company’s Total Leverage Ratio as
defined in the 2017 Credit Agreement. The interest rate for base
rate loans denominated in Canadian dollars fluctuates and is
equal to the higher of (i) Wells Fargo’s prime rate for Canadian
dollar loans and (ii) the CDOR Rate (as defined in the 2017
Credit Agreement) plus 1.0%, in each case plus a margin of 0.25%
to 1.00% based upon the Company’s Total Leverage Ratio as
defined in the 2017 Credit Agreement. The interest rate for
eurodollar loans fluctuates based on the rate for deposits of
U.S. dollars as published by the ICE Benchmark Administration
Limited plus a margin of 1.25% to 2.00% based upon the Company’s
Total Leverage Ratio as defined in the 2017 Credit Agreement.

Among other fees, the Company pays a commitment fee of 0.25% to
0.35% per annum (due quarterly) on the aggregate unused revolving
commitments under the 2017 Credit Agreement based upon the
Company’s Total Leverage Ratio as defined in the 2017 Credit
Agreement. The Company will also pay fees with respect to any
letters of credit issued under the 2017 Credit Agreement.
Covenants and Events of Acceleration

The 2017 Credit Agreement contains usual and customary negative
covenants for transactions of this type, including, but not
limited to, restrictions on the Company’s ability, and in
certain instances, its subsidiaries’ ability, to consolidate or
merge; substantially change the nature of its business; sell,
lease or otherwise transfer any substantial part of its assets;
create or incur indebtedness; create liens; and make
acquisitions. The negative covenants are subject to certain
exceptions as specified in the 2017 Credit Agreement. The 2017
Credit Agreement also requires the Company to satisfy certain
financial covenants, including a maximum Total Leverage Ratio as
determined in accordance with the 2017 Credit Agreement and a
minimum ratio of Consolidated Operating EBITDA to Consolidated
Interest Expense as determined in accordance with the 2017 Credit
Agreement.

The 2017 Credit Agreement also includes customary events of
default, including, among other things, payment default, covenant
default, breach of representation or warranty, bankruptcy,
cross-default, material ERISA events, a change of control of the
Company, material money judgments and failure to maintain
subsidiary guarantees.
Other Relationships

Certain of the lenders under the 2017 Credit Agreement or their
affiliates have provided and/or may in the future provide
financial advisory, investment banking and commercial banking
services in the ordinary course of business to the Company and
certain of its affiliates, for which they have received, and may
in the future receive, customary fees and expense reimbursement.
Wells Fargo Bank, National Association, Bank of America, N.A.,
The Bank of Tokyo-Mitsubishi UFJ, LTD., JPMorgan Chase Bank,
N.A., Mizuho Bank Ltd., SunTrust Bank, BNP Paribas, Fifth Third
Bank, Royal Bank of Canada, Sumitomo Mitsui Banking Corporation,
The Bank of Nova Scotia, Canadian Imperial Bank of Commerce, New
York Branch, Compass Bank, Key Bank National Association, Regions
Bank, U.S. Bank National Association, Deutsche Bank AG, New York
Branch, Morgan Stanley Senior Funding, Inc., The Northern Trust
Company, The Huntington National Bank, Cadence Bank, N.A., First
National Bank of Omaha, Raymond James Bank, N.A., Synovus Bank,
First Commercial Bank, Ltd., Land Bank of Taiwan Los Angeles
Branch, Mega International Commercial Bank Co., Ltd., Silicon
Valley Branch, Banco de Sabadell, S.A. – Miami Branch, Chang Hwa
Commercial Bank, Ltd., Los Angeles Branch, Woodforest National
Bank, and Modern Bank, N.A. or their respective affiliates were
lenders and/or agents under the 2013 Credit Agreement. In
addition, in the ordinary course of their business activities,
the lenders under the 2017 Credit Agreement and/or their
affiliates may make or hold a broad array of investments and
actively trade debt and equity securities (or related derivative
securities) and financial instruments (including bank loans) for
their own account and for the accounts of their customers. Such
investments and securities activities may involve securities
and/or instruments of the Company or its affiliates. The lenders
under the 2017 Credit Agreement also hedge or may in the future
hedge their credit exposure to the Company consistent with their
customary risk management policies.
Qualification

The preceding summary of the 2017 Credit Agreement and the First
Amendment are qualified in their entirety by reference to the
full text of such agreements, copies of which are attached as
Exhibits 10.1 and 10.2 hereto and incorporated by reference
herein.

Item 1.02 Termination of a Material Definitive Agreement.

Simultaneously with entering into the 2017 Credit Agreement
described in Item 1.01 above, the Company refinanced
approximately $3.40 billion in outstanding indebtedness in
connection with replacing the 2013 Credit Agreement. The lending
commitments under the 2013 Credit Agreement were scheduled to
expire in September 2017, July 2018 and December 2019. As of June
14, 2017, loans under the 2013 Credit Agreement accrued interest
at the blended rate of 3.06% per annum.

Item 2.03 Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.

The information provided in Item 1.01 above is incorporated
herein by reference.

Item 2.04 Triggering Events That Accelerate or Increase a Direct
Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement.

The information provided in Item 1.01 above is incorporated
herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.

Document Description

10.1

Amended and Restated Credit Agreement, dated as of June 14,
2017, by and among Alliance Data Systems Corporation,
certain subsidiaries parties thereto, as guarantors, Wells
Fargo Bank, National Association, as Administrative Agent,
and various other agents and lenders.

10.2

First Amendment to Amended and Restated Credit Agreement
and Incremental Amendment, dated as of June 16, 2017, by
and among Alliance Data Systems Corporation, and certain
subsidiaries parties thereto, as guarantors, Wells Fargo
Bank, National Association, as Administrative Agent, and
various other lenders.



ALLIANCE DATA SYSTEMS CORP Exhibit
EX-10.1 2 exhibit_10-1.htm EXHIBIT 10.1 Exhibit 10.1 Published CUSIP Number: 01858HAC7 Revolving Credit CUSIP Number: 01858HAD5 Term Loan CUSIP Number: 01858HAE3 AMENDED AND RESTATED CREDIT AGREEMENT   dated as of June 14,…
To view the full exhibit click here
About ALLIANCE DATA SYSTEMS CORPORATION (NYSE:ADS)

Alliance Data Systems Corporation is a provider of data-driven marketing and loyalty solutions serving consumer-based businesses in a range of industries. The Company offers a portfolio of integrated outsourced marketing solutions, including customer loyalty programs, database marketing services, end-to-end marketing services, analytics and creative services, direct marketing services, and private label and co-brand retail credit card programs. The Company operates through three segments: LoyaltyOne, which provides coalition and short-term loyalty programs through the Company’s Canadian AIR MILES Reward Program and BrandLoyalty; Epsilon, which provides end-to-end, integrated marketing solutions, and Card Services, which provides risk management solutions, account origination, funding, transaction processing, customer care, collections and marketing services for the Company’s private label and co-brand retail credit card programs.

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