CSG Systems secures new $600M credit facility

ENGLEWOOD, CO – CSG Systems International Inc. (NASDAQ:CSGS), a leader in providing business support solutions with a market capitalization of $1.67 billion and impressive gross profit margins of 48.7%, announced on Monday the successful negotiation of a new $600 million credit agreement. According to InvestingPro data, the company maintains a strong financial health score, positioning it well for this new credit facility. The new five-year revolving loan facility, which replaces the company’s previous credit arrangement, was established with Royal Bank of Canada as the administrative agent, alongside other financial institutions.

The new credit arrangement, effective March 14, 2025, offers CSG Systems increased financial flexibility with a consolidated revolving loan facility, maintaining borrowing rates consistent with the prior agreement. The updated terms also include fewer financial covenants and less restrictive negative covenants compared to the previous credit agreement. This aligns well with the company’s prudent financial management, as InvestingPro analysis shows the company operates with a moderate debt level, maintaining a healthy total debt-to-capital ratio of 0.25 and a current ratio of 1.46.

Upon the execution of the new credit agreement, CSG Systems drew $140.6 million from the facility to repay the outstanding balance of the previous credit agreement and cover related fees and expenses. The remaining funds will be allocated for general corporate purposes.

Interest rates under the new agreement are tied to an adjusted Secured Overnight Financing Rate plus a margin ranging from 1.375% to 2.125%, or an alternate base rate plus a margin of 0.375% to 1.125%, based on CSG’s leverage ratio. Additionally, the company will incur a commitment fee on the unused portion of the facility, also dependent on its leverage ratio.

The credit agreement includes customary covenants, mandating quarterly fee payments and setting forth conditions for mandatory prepayment. CSG Systems and certain subsidiaries have also entered into a security agreement, pledging most of their assets to secure the obligations under the new credit facility.

This financial maneuver comes as part of CSG Systems’ strategic financial management, ensuring the company maintains a strong liquidity position. The full details of the credit agreement will be disclosed in the company’s quarterly report for the first quarter of 2025. Based on InvestingPro’s Fair Value analysis, the stock currently appears slightly undervalued, with additional ProTips and comprehensive analysis available in the Pro Research Report, which offers deep-dive insights into this and 1,400+ other US stocks.

The information in this article is based on a press release statement.

In other recent news, CSG Systems International Inc. reported significant developments that could interest investors. The company announced a 7% increase in its quarterly cash dividend, raising it to $0.32 per share, reflecting its confidence in financial stability and commitment to delivering shareholder value. This decision aligns with CSG’s history of rewarding investors and is scheduled for payment in April 2025. On the analyst front, Jefferies raised its price target for CSG Systems to $75 while maintaining a Buy rating, citing the company’s strategic expansion efforts and market positioning. Jefferies’ analysis suggests potential growth for CSG, with a focus on increasing market share beyond U.S. Communication Service Providers. Meanwhile, Stifel analysts maintained a Buy rating with a $60 price target amid reports that NEC Corporation might consider acquiring CSG Systems. These discussions are in preliminary stages, but analysts see potential strategic benefits for NEC due to CSG’s higher profit margins. Regulatory concerns regarding this potential merger appear minimal according to Stifel, highlighting the competitive landscape’s current dynamics.

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