Nasdaq amends credit agreement in connection with Verafin acquisition
Nasdaq, Inc. (NASDAQ:NDAQ) has amended a credit agreement in connection with the recently announced acquisition of Verafin for $2.75 billion in cash. This becomes clear from a report filed with the Securities and Exchange Commission (SEC) on December 3, 2020.
The document says that, on December 1, 2020, Nasdaq entered into Amendment No. 1 to Credit Agreement with the lenders party thereto and Bank of America, N.A., as administrative agent amending that certain Credit Agreement, dated as of April 25, 2017.
The Amendment Agreement amends the Existing Credit Agreement to, among other things,
- provide that, subject to closing of the Acquisition in accordance with the Purchase Agreement and the satisfaction of certain other customary conditions, Nasdaq may borrow revolving loans for the purpose of financing the acquisition of Verafin, repaying certain existing indebtedness of Verafin and paying fees, costs and expenses in connection with the foregoing,
- increase the maximum leverage ratio permitted thereunder from 3.50 to 1.00 to 4.50 to 1.00 upon consummation of the acquisition (stepping down to 4.00 to 1.00 over time), and
- remove the interest coverage ratio financial covenant.
Let’s recall that, when the acquisition was first announced, Nasdaq said it intended to finance the transaction with a combination of $2.5 billion of debt and cash on hand and expects debt / non-GAAP EBITDA leverage to be approximately 3.9x pro forma for the transaction. Nasdaq intends to pursue its existing capital deployment plan, including dividend payments and share repurchases, consistent with past practice, and expects to de-lever over time to return to a leverage ratio consistent with its current investment grade ratings.
The transaction is subject to regulatory approvals and other customary closing conditions. Spectrum Equity, a leading growth equity investor based in Boston and San Francisco, and Information Venture Partners, a leading FinTech-focused venture capital firm based in Toronto, both significant investors in Verafin, have agreed to sell their stake as part of this transaction.
The deal is expected to close in the first quarter of 2021.