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Merrill Lynch, J.P. Morgan Securities Among Lenders in FNF Financing

October 28, 2013, 07:39 AM
Filed Under: Specialty Industries

Fidelity National Financial, Inc., a leading provider of title insurance, mortgage services and diversified services, announced the completion of the amendment of its existing $800 million senior unsecured revolving credit facility (“credit facility”) and the amendment of its $1.1 billion delayed-draw term loan (“term loan”) and the signing of a commitment letter (“bridge commitment letter”) that provides for an up to $800 million short-term loan (“bridge loan”).  The amendments of the credit facility and the term loan and the bridge commitment letter are all related to FNF’s previous announcement concerning the agreement (“merger agreement”) to acquire Lender Processing Services, Inc. (“LPS”).

Among other changes, the amendments to the credit facility and term loan permit FNF to incur the indebtedness in respect of the bridge loan and incorporate other technical changes to describe the structure of the LPS acquisition.

Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC, U.S. Bank National Association and Wells Fargo Securities, LLC acted as joint lead arrangers and joint book managers of the credit facility and term loan. Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities LLC acted as joint lead arrangers of the bridge commitment letter.

In connection with the merger agreement, FNF entered into an equity commitment letter and stock purchase agreement with funds affiliated with Thomas H. Lee Partners, L.P. (“THL”) pursuant to which THL agreed to purchase a minority equity interest in Black Knight Financial Services, Inc. (“BKFS”), a subsidiary of FNF which, following FNF’s acquisition of LPS, would own the business of FNF’s subsidiary ServiceLink, Inc. and LPS.  The proceeds of THL’s initial equity commitment were to be used to finance a portion of the aggregate merger consideration and related costs, fees and expenses.  However, it is now contemplated that, subsequent to the consummation of the merger with LPS and the implementation of an internal reorganization whereby BKFS will be separated and operated as two separate limited liability companies which will own LPS and ServiceLink.  THL will purchase a minority interest in each of the two companies for an amount equal to 35% of the issued and outstanding equity interest of each such company.  To effect the change to the limited liability structure, FNF will initially acquire 100% of LPS, utilizing the bridge loan proceeds as a portion of the aggregate merger consideration.  Immediately following the closing of the merger with LPS, the technology, data and analytics business from LPS will be contributed to one of the newly formed limited liability companies and ServiceLink and the transaction services business from LPS will be contributed into the other newly formed limited liability company.  On October 24, 2013, LPS consented to the termination of the equity commitment letter, stock purchase agreement and the initial equity commitment.

The bridge loan will mature on the second business day following the funding thereof and will require no scheduled amortization payments.  Such loans will bear interest at a rate equal to the highest of (i) the Bank of America prime rate, (ii) the federal fund effective rate from time to time plus 0.5% and (iii) the one month adjusted London interbank offered rate plus 1.0%.  Otherwise, the terms of the bridge loan will be substantially the same as the terms of the term loan.  The bridge loan will be used to fund a portion of the cash consideration for the acquisition of LPS and to pay certain costs, fees and expenses in connection with the acquisition.

FNF is the nation’s largest title insurance company through its title insurance underwriters – Fidelity National Title, Chicago Title, Commonwealth Land Title and Alamo Title – that collectively issue more title insurance policies than any other title company in the United States.

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