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Debt and Short-Term Borrowings
 6 Months Ended
Jun. 30, 2024
Debt Disclosure [Abstract]  
Debt and Short-Term Borrowings Debt and Short-Term Borrowings
Debt at June 30, 2024 and December 31, 2023 was as follows:
(In thousands)June 30, 2024December 31, 2023
2027 Term A Loan bearing interest at a variable interest rate (SOFR plus applicable margin(1)(2))
$438,021 $449,450 
2030 Term B Loan bearing interest at a variable interest rate (SOFR plus applicable margin(1)(3))
521,847 521,233 
Deferred consideration from Business Combinations11,505 19,467 
Note payable due September 1, 2030(1)
7,325 7,403 
Total debt$978,698 $997,553 
 
(1)Net of unaccreted discount and unamortized debt issue costs, as applicable.
(2)Subject to a minimum rate ("SOFR floor") of 0.00% plus applicable margin of 2.00% at June 30, 2024 and 1.50% at December 31, 2023.
(3)Subject to a SOFR floor of 0.50% plus applicable margin of 3.25% at June 30, 2024 and an applicable margin of 3.50% at December 31, 2023.

Secured Credit Facilities
On December 1, 2022, EVERTEC and EVERTEC Group, entered into a credit agreement with a syndicate of lenders and Truist Bank, as administrative agent and collateral agent, providing for (i) a $415.0 million term loan A facility that matures on December 1, 2027, and a $200.0 million revolving credit facility (the “Revolving Facility”) that matures on December 1, 2027. On October 30, 2023, Evertec, EVERTEC Group and other Loan Parties (as defined in the Existing Credit Agreement) party thereto, entered into a first amendment (the “Amendment”) to the credit agreement, dated as of December 1, 2022 (the “Existing Credit Agreement,” and as amended by the Amendment, the “Amended Credit Agreement”), with a syndicate of lenders and Truist, as administrative agent and collateral agent. Under the Amended Credit Agreement, a syndicate of financial institutions and other lenders provided (i) additional term loan A commitments in the amount of $60.0 million and (ii) a new tranche of term loan B commitments in the amount of $600.0 million (the “TLB Facility,” and together with the Incremental TLA Facility, the “Facilities”). The $600.0 million term loan B facility matures on October 30, 2030. Unless otherwise indicated, the terms and conditions detailed below apply to both the TLA facility and TLB facility. In the fourth quarter of 2023, the Company prepaid $60 million of the outstanding balance on TLB facility.

At June 30, 2024, the unpaid principal balance of the TLA Facility and TLB Facility were $441.5 million and $540.0 million, respectively. The additional borrowing capacity for the Revolving Facility at June 30, 2024 was $194.0 million, considering letters of credit issued. The Company issues letters of credit against the Revolving Facility which reduce the additional borrowing capacity of the Revolving Facility.

Deferred Consideration from Business Combinations

As part of the Company’s merger and acquisition activities, the Company may enter into agreements by which a portion of the purchase price is financed directly by the seller. At June 30, 2024 and December 31, 2023, the unpaid principal balance of these agreements amounted to $11.5 million and $19.5 million, respectively. Obligations bear interest at rates ranging from 2% to 12% with maturities ranging from October 2024 through March 2027. The current portion of the deferred consideration is included in accounts payable and the long-term portion is included in other long-term liabilities on the Company's unaudited condensed consolidated balance sheet.

Note Payable

In September 2023, EVERTEC Group entered into a non-interest bearing financing agreement amounting to $10.1 million to purchase software and maintenance which the Company recorded on a discounted basis using an implied interest of 6.9%. As of June 30, 2024, the outstanding principal balance of the note payable on a discounted basis was $7.3 million. The current portion of the note is included in accounts payable and the long-term portion is included in other long-term liabilities on the Company's unaudited condensed consolidated balance sheet.

Interest Rate Swaps

As of June 30, 2024, the Company has four interest rate swap agreements which convert a portion of the interest rate payments on the Company's Term Loan Facilities from variable to fixed. The interest rate swaps are used to hedge the market risk from changes in interest rates corresponding with the Company's variable rate debt. The interest rate swaps are designated as cash flow hedges and are considered highly effective. Cash flows from the interest rate swaps are included in the accrued liabilities and accounts payable line item in the Company's unaudited condensed consolidated statements of cash flows. Changes in the fair value of the interest rate swaps are recognized in other comprehensive (loss) income until the gains or losses are reclassified to earnings. Gains or losses reclassified to earnings are presented within interest expense in the accompanying condensed consolidated statements of income and comprehensive (loss) income.
Swap AgreementEffective date  Maturity Date  Notional Amount  Variable Rate  Fixed Rate
2018 SwapApril 2020November 2024$250 million1-month SOFR2.929%
2023 SwapNovember 2024December 2027$250 million1-month SOFR3.375%
2024 SwapMarch 2024October 2027$150 million1-month SOFR4.182%
2024 SwapMarch 2024October 2027$150 million1-month SOFR4.172%

At June 30, 2024, the carrying amount of the derivatives included on the Company's unaudited condensed consolidated balance sheet was an asset of $7.2 million. At December 31, 2023, the carrying amount of the derivatives included on the Company's unaudited condensed consolidated balance sheet was an asset of $4.4 million and a liability of $0.9 million, included in other long-term liabilities. The fair value of these derivatives are estimated using Level 2 inputs in the fair value hierarchy on a recurring basis. Refer to Note 8 for disclosure of gains (losses) recorded on cash flow hedging activities.

During the three and six months ended June 30, 2024, the Company reclassified gains of $2.4 million and $4.1 million, respectively, from accumulated other comprehensive (loss) income into interest expense compared to gains of $1.4 million and
$2.4 million, respectively, for the corresponding periods in 2023. Based on current SOFR rates, the Company expects to reclassify gains of $5.7 million from accumulated other comprehensive (loss) income into interest expense over the next 12 months.