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| CVG > SEC Filings for CVG > Form 8-K on 6-Jul-2009 | All Recent SEC Filings |
6-Jul-2009
Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligat
Information set forth under Item 2.03 of this Current Report on Form 8-K is incorporated herein by reference.
New $125.0 Million Accounts Receivable Securitization Facility
On June 30, 2009, Convergys Corporation (the "Company") entered into a new $125.0 million accounts receivable securitization facility (the "New Facility"). The New Facility has two components; one with Wachovia Bank, National Association ("Wachovia") which is a three-year facility, and the second with The Bank of Nova Scotia ("Scotia") which is a 364-day facility.
The New Facility was entered into pursuant to (1) Receivables Sale Agreements, both dated as of June 30, 2009 (the "Sale Agreements"), among the Company and an indirect subsidiary of the Company (the "Originators"), and Convergys Funding Inc., a Kentucky corporation and a special purpose entity (the "SPE") (whose voting interests are substantially owned by the indirect subsidiary of the Company), and (2) a Receivables Purchase Agreement, dated as of June 30, 2009 (the "Purchase Agreement") among the SPE, certain purchasers from time to time party thereto (the "Purchasers"), Liberty Street Funding LLC, The Bank of Nova Scotia, The Bank of Nova Scotia, as the Scotia Group agent, and Wachovia Bank, National Association, as administrative agent.
Under the Sale Agreements the Originators may during the term thereof sell specified accounts receivable to the SPE, which may in turn, pursuant to the Purchase Agreement, transfer an undivided interest in such accounts receivable to the Purchasers. The Company along with the Company's subsidiaries receive the economic benefit of the New Facility. The transactions contemplated by the New Facility do not constitute a form of off-balance sheet financing, and will be fully reflected in the Company's financial statements.
The maximum availability under the New Facility is $125.0 million. Availability is further subject to changes in the credit ratings of the Originator's customers, customer concentration levels, and certain characteristics of the accounts receivable being transferred. The yield under the Purchase Agreements is based on, in the case of Wachovia, the LIBOR Market Index Rate ("LMIR") or the Alternate Base Rate (both as defined in the Purchase Agreement), and in the case of Scotia, the LIBO Rate, CP Cost (both as defined in the Purchase Agreement) or the Alternate Base Rate, plus in each case, based upon a margin as indicated in the Agreements. In addition, the SPE is obligated to pay commitment fees to the Purchasers based on the amount of each Purchaser's commitment.
The interest coverage ratio requires the Company not to permit the ratio, calculated at the end of each fiscal quarter for the four fiscal quarters then ended, of (a) Consolidated EBITDA to (b) Consolidated Interest Expense (both as defined in the Agreements), for such period to be less than 4.0 to 1.0. Further, the Company shall not permit at any time the ratio of (a) Consolidated Total Debt at such time to (b) Consolidated EBITDA for the most recently ended period of four consecutive fiscal quarters, to be greater than 3.25 to 1.0. These financial tests are substantively identical to financial covenants already contained in the Company's $400.0 million revolving credit facility.
The descriptions of the Receivables Sale Agreements and the Receivables Purchase Agreement in this Form 8-K are qualified in their entirety by reference to the Receivables Sale Agreements and the Receivables Purchase Agreement.
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