Fitch: SunGard's Ratings Unaffected by Credit Facility Amendment.

NEW YORK -- Fitch's ratings and Negative Outlook on SunGard Data Systems, Inc. (SunGard) are unaffected by the company's amendment and extension of its secured credit facilities. Fitch currently rates SunGard as follows:

--Issuer Default Rating (IDR) 'B';

--$4.7 billion senior secured term loan due 2014 and 2016 'BB-/RR2';

--$829 million senior secured revolving credit facility (RCF) due 2011 and 2013 'BB-/RR2';

--$250 million 4.875% senior notes due 2014 'B/RR4';

--$1.6 billion 9.125% senior unsecured notes due 2013 'B-/RR5';

--$500 million 10.625% senior unsecured notes due 2015 'B-/RR5';

--$1 billion 10.25% senior subordinated notes due 2015 'CCC/RR6'.

On June 9, SunGard amended the senior secured credit agreement governing its $4.7 billion term loan (including the $4.2 billion original term loan and $500 million incremental term loan) and $1 billion RCF. The amended terms include the: i) extension of the maturity of approximately $2.7 billion of the original term loan to 2016 from 2014; ii) reduction of the RCF to $829 million from $1 billion and extension of the expiration of $580 million of capacity to 2013 from 2011; iii) relaxation of financial covenants, including a 0.75 times (x) increase in maximum total leverage beginning Q4'10 and onward and an increase in maximum capex from $450 million to $475 million beginning 2014; iv) resetting the basket for acquisition of non-guarantor subsidiaries, including foreign subsidiaries, to $325 million; and v) increased flexibility around refinancing options for the term loan and RCF.

The amendments reduce intermediate-term refinancing risk by spreading SunGard's maturity schedule through 2016, a modest positive in Fitch's view. The previous maturity schedule was highly concentrated in 2013-2014, with more than 75% of total debt maturing during this period. Fitch also views the relaxation of the leverage covenant positively, given the resultant reduced risk of EBITDA declines leading to covenant breaches over the medium term, a concern previously raised by Fitch. However, Fitch believes the increased flexibility for acquisitions provided by the looser financial covenant and increased carve-out for international acquisitions could drive a somewhat more aggressive use of cash and/or debt for acquisitions over the medium term, potentially reducing the focus on debt reduction. Additionally, the increased pricing and fees associated with the amendment will further reduce free cash flow, which Fitch already expects to be under pressure due to lower operating profits. Fitch expects that free cash flow could decline to $150 million-$200 million in 2009, compared with over $300 million in recent years.

While the aforementioned developments are a net positive, the Negative Outlook primarily reflects Fitch's expectations of meaningful declines in organic revenue and EBITDA at SunGard's Financial Systems (FS) segment through at least 2009. Aside from weaker customer demand, Fitch believes revenues and profitability will be negatively affected by increased pricing pressure upon contract renewal and a reduction of the customer base due to anticipated consolidation. Over the longer term, Fitch believes that the heightened degree of uncertainty around the size and profile of the financial services industry represents an additional source of ratings pressure. Operating profits from Higher Education (HE), Public Sector (PS) and, to a lesser extent, SunGard's Availability Services (AS) businesses, are also expected to decline in 2009, reducing these businesses' ability to offset expected declines in FS. Such profitability declines could drive leverage outside of Fitch's expectations for the ratings category, as well as pressure free cash flow.

Total debt at March 31, 2009 was $8.6 billion and consisted primarily of: $4.7 billion of senior secured term loans, of which approximately $2 billion expires 2014 and $2.7 billion expires 2016; approximately $225 million drawn under the senior secured RCF expiring 2011 and 2013; $250 million outstanding under the company's new on-balance accounts receivable (AR) securitization facility (the facility was increased by $66.5 million subsequent to quarter end); approximately $250 million of 4.875% senior notes due 2014, which are secured by real property; $1.6 billion of 9.125% senior unsecured notes due 2013; $500 million of 10.625% senior unsecured notes due 2015 and $1 billion of 10.25% senior subordinated notes due 2015.

Fitch believes SunGard's current liquidity position is sufficient, given the company's minimal near-term debt service needs. Pro forma for the amendments, liquidity as of March 31, 2008 consisted of $491 million of cash and approximately $604 million available under its $829 million RCF, of which $249 million expires 2011 and $580 million expires 2013. Liquidity is also supported by annual free cash flow, which as previously mentioned, is expected to decline to $150 million-$200 million in 2009, driven by lower operating profits and higher interest expense associated with the term loan and RCF.

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.