Fitch Downgrades Fidelity National Information Services to 'BB' on Acquisition; Sec. Bank Debt 'BB+'

Business Wire, Sept 17, 2007

NEW YORK -- Fitch Ratings, in response to Fidelity National Information Services (NYSE:FIS) $1.8 billion acquisition of eFunds Corp. (EFD) and the associated debt financing, has resolved the Rating Watch Negative status on FIS by taking the following ratings actions:

--Issuer Default Rating (IDR) downgraded to 'BB' from 'BB ';

--$900 million secured revolving credit facility (RCF) assigned a rating of 'BB ';

--Secured term loans assigned a rating of 'BB ';(a)

--4.75% senior notes (equally and ratably secured with the new bank facility) affirmed at 'BB '.

(a) The secured term loans consist of a $2.1 billion term loan A and a $1.6 billion term loan B.

Fitch also withdraws the following rating:

--Senior unsecured credit facility 'BB '.

The Rating Outlook is Stable. Pro Forma for the close of the EFD acquisition, approximately $4.8 billion in debt is affected by Fitch's actions, including the credit facility.

The IDR downgrade reflects higher leverage pro forma for the mostly debt-financed EFD acquisition as well as the resulting integration risk and relative lower financial flexibility.

FIS announced its agreement to acquire EFD on June 27, 2007 for $1.8 billion in cash consideration. For LTM ending June 30, 2007, EFD generated $553 million in revenue and $135 million in EBITDA. FIS utilized a new $1.6 billion secured term loan to finance the majority of the acquisition in addition to approximately $200 million of available cash. In conjunction with this new secured term loan, FIS' existing RCF and term loan A agreement were amended to be equally secured. In addition, the indenture governing the 4.75% senior unsecured notes due 2008, which were originally issued by Certegy Inc., requires FIS to equally and ratably secure these notes with the secured bank debt. FIS closed its acquisition of EFD on September 12, 2007.

The ratings and Outlook reflect the following considerations:

--FIS generates a significant portion of its revenue from long-term contracts with a majority of revenues recurring in nature;

--FIS offers a well diversified product portfolio serving several market segments, including small regional financial institutions, retailers as well as mortgage lenders, in addition to having counter cyclical revenue streams;

--FIS serves a diverse customer base of over 7,800 financial institutions generating slightly more than 10% of its revenue from outside the US;

--FIS has historically been highly acquisitive which Fitch expects to continue going forward; and

--FIS competes in a highly fragmented and highly competitive market with modest pricing pressure that can negatively impact profitability.

Fitch also considers the following issues related to the acquisition of EFunds:

--Fitch expects leverage pro forma for the acquisition to increase to approximately 3.5 times (x) from 2.4x as of June 2007;

--EFD offers a complimentary product portfolio and customer base and the combined company will have significant cross selling opportunities;

--Fitch expects FIS to be able to generate modest cost synergies from the consolidation of EFD's operations; and

--There is modest integration risk and customer retention risk associated with the acquisition.

While recognizing the inherent integration risk associated with the EFD transaction, Fitch expects that future free cash flow would be used by FIS to reduce leverage to 3x or below which could lead to positive rating actions. However, Fitch does not expect leverage to fall materially below 3x due to the highly acquisitive nature of the company and the potential for the use of FCF for shareholder friendly actions, the combination of which limits potential upside to the rating and creates on-going event risk to the credit.

Liquidity, pro forma for the acquisitions, is expected to be adequate with approximately $200 million of cash, a $900 million secured revolving credit facility maturing 2012, with approximately $400 million of availability, and solid annual free cash flow. Total debt, pro forma for the acquisition, is expected to be approximately $4.6 billion consisting primarily of $500 million drawn on the secured RCF, $2.1 billion in a secured term loan A maturing 2012, $1.6 billion in a secured term loan B maturing in 2014, and $200 million in unsecured notes maturing 2008.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.