Synnex amends credit agreement to allow further debt for acquisition

By Wendy Van Sickle

Columbus, Ohio, Aug. 8 – Synnex Corp. amended its credit agreement originally dated Nov. 27, 2013 with Bank of America, NA as administrative agent to permit the company to incur up to $1.8 billion of additional secured dent in connection with its acquisition of Convergys Corp., among other changes, according to an 8-K filing with the Securities and Exchange Commission.

Wednesday’s amendment also increased the amount of revolving loans Synnex may request up to $500 million plus an amount that would not cause the company’s first-lien leverage ratio to exceed 2.75 times.

Additionally, the amendment permits the company to assume Convergys’ outstanding convertible debentures and temporarily increases the maximum consolidated leverage ratio Synnex must maintain to 4.25 times from 4 times. The leverage ratio increase will apply only from the and after the first fiscal quarter ending after the closing of the Convergys acquisition through the fifth full quarter after closing. After that, the ratio would return to the current 4 times.

As previously reported, Synnex received a commitment for $1.8 billion of debt financing to help fund its acquisition of Convergys and maintain liquidity for ongoing working capital needs, according to a company presentation.

Under the agreement, Convergys is being bought for $26.50 per share, which includes $13.25 per share in cash and 0.1193 Synnex common shares per Convergys share. The transaction is valued at about $2.43 billion.

Debt to EBITDA is expected to be around 3.5 times at closing, with the plan being to return to historical levels of 2.5 times or less within 18 to 24 months.

Closing is expected by the end of the year, subject to the approval of shareholders of both companies, regulatory requirements and customary conditions.

Synnex is a Fremont, Calif.-based business process services company. Convergys is a Cincinnati-based customer management services provider.

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