CSG Systems International Inc. filed SEC Form 8-K: Entry into a Material Definitive Agreement, Termination of a Material Definitive Agreement, Creation of a Direct Financial Obligation
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Item 1.01 Entry into a Material Definitive Agreement.
On March 14, 2025, CSG Systems International, Inc. (“CSG”) and certain of its subsidiaries entered into a new $600.0 million five-year debt arrangement with Royal Bank of Canada (“RBC”) acting as Administrative Agent, Collateral Agent, Swingline Lender, and an Issuing Bank; Citizens Bank, N.A. and PNC Bank, National Association, as Co-Documentation Agents; and RBC, HSBC Bank USA, National Association, U.S. Bank National Association, and Wells Fargo Securities, LLC, as Joint Lead Arrangers and Joint Bookrunners (the “2025 Credit Agreement”). The 2025 Credit Agreement replaced CSG’s $600.0 million five-year credit agreement entered into in September 2021 (the “2021 Credit Agreement”). The key benefits of the new arrangement include: (i) an increase in the tenor of the loan from September 2026 to March 2030 (subject to a springing maturity of 91 days prior to the maturity date of certain long-term indebtedness of CSG if, on such date, the aggregate principal amount of such indebtedness equals or exceeds the greater of $127.0 million and 50% of consolidated EBITDA (subject to certain exceptions)); (ii) consolidation to a revolving loan facility of $600.0 million, providing CSG with increased flexibility; (iii) borrowing rate terms identical to the 2021 Credit Agreement; and (iv) fewer financial covenants and less restrictive negative covenants when compared to the 2021 Credit Agreement.
The 2025 Credit Agreement consists of a $600.0 million aggregate principal five-year revolving loan facility (the “2025 Revolver”). The 2025 Credit Agreement replaced the 2021 Credit Agreement, which consisted of a $150.0 million term loan (of which $125.6 million was outstanding) and a $450.0 million revolving loan facility (of which $10.0 million was outstanding). Upon execution of the 2025 Credit Agreement, CSG withdrew $140.6 million from the 2025 Revolver. These funds were used to repay the outstanding $135.6 million balance of the 2021 Credit Agreement and certain fees and expenses in connection with the new debt arrangement, with the remainder to be used for general corporate purposes.
The interest rates under the 2025 Credit Agreement are based upon CSG’s choice of an adjusted Secured Overnight Financing Rate (“SOFR”) plus an applicable margin of 1.375% - 2.125%, or an alternate base rate (“ABR”) plus an applicable margin of 0.375% - 1.125%, with the applicable margin, depending on CSG’s then-net secured total leverage ratio. CSG will pay a commitment fee of 0.150% - 0.325% of the average daily unused amount of the 2025 Revolver, with the commitment fee rate also dependent upon CSG’s then-net secured total leverage ratio.
The 2025 Credit Agreement requires quarterly commitment fee payments and interest payments based on the interest election period. The 2025 Credit Agreement contains certain customary mandatory prepayment or repayment provisions. As specified in the 2025 Credit Agreement, if certain customary events were to occur, CSG may be required to pay all amounts outstanding under the 2025 Credit Agreement, together with interest payable thereon.
The 2025 Credit Agreement contains customary affirmative covenants. In addition, the 2025 Credit Agreement has customary negative covenants that places limits on CSG’s ability to: (i) incur additional indebtedness; (ii) create liens on its property; (iii) make investments; (iv) enter into mergers and consolidations; (v) sell assets; (vi) declare dividends or repurchase shares; (vii) engage in certain transactions with affiliates; (viii) prepay certain indebtedness; and (ix) issue capital stock of subsidiaries. CSG must also meet a total net leverage ratio financial covenant.
In conjunction with the 2025 Credit Agreement, CSG entered into a security agreement in favor of RBC, as Collateral Agent (the “Security Agreement”). Under the Security Agreement and 2025 Credit Agreement, certain of CSG’s subsidiaries have guaranteed its obligations, and CSG and such subsidiaries have pledged substantially all of their assets to secure the obligations under the 2025 Credit Agreement and such guarantees.
The 2025 Credit Agreement will be filed with CSG’s Quarterly Report on Form 10-Q for the quarter ending March 31, 2025.
Item 1.02 Termination of a Material Definitive Agreement.
The information set forth above under Item 1.01 is hereby incorporated by reference into this Item 1.02.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth above under Item 1.01 is hereby incorporated by reference into this Item 2.03.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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CSG SYSTEMS INTERNATIONAL, INC. |
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Date: |
March 18, 2025 |
By: |
/s/ Lori J. Szwanek |
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Lori J. Szwanek |