Fidelity National Financial today announced that its board of directors has approved a plan to recapitalize its subsidiary, Fidelity National Information Services (FNIS), and to pay a special cash dividend to Fidelity stockholders. FNIS is the holding company for Fidelity’s technology solutions, processing services and information services businesses.

Under the terms of the recapitalization plan, FNIS will enter into up to $2.8 billion in senior secured credit facilities, for which indicative commitments have been received, with a consortium of participating lenders.

The proceeds of those senior secured credit facilities, which will not be guaranteed by Fidelity, will be fully drawn at closing. FNIS will repay all the debt outstanding under its existing credit facility and will distribute up to $2.7 billion to Fidelity.

The cash distribution from FNIS to FNF is expected to constitute a tax-free transaction for Fidelity.

The recapitalization transaction is expected to close in the first quarter of 2005. After completion, Fidelity will pay a special $10 per share cash dividend to Fidelity stockholders.

The cash dividend to stockholders will require approximately $1.8 billion of the expected up to $2.7 billion cash distribution from FNIS. The remaining proceeds will be used to repay Fidelity bank debt and for other general corporate purposes, including the potential repurchase of Fidelity stock.

Additionally, Fidelity also announced that FNIS has signed a letter of intent to sell a combined 25 percent minority equity interest in the common stock of FNIS to Thomas H. Lee Partners LP and Texas Pacific Group for a total purchase price of $500 million, resulting in an implied enterprise value for FIS of $4.8 billion, assuming $2.8 billion of outstanding FNIS indebtedness at closing. The sale of the minority equity interest in FNIS will result in a gain of approximately $375 million for Fidelity.

Thomas H. Lee Partners is a Boston-based private equity firm focused on identifying and acquiring substantial ownership positions in growth companies. Texas Pacific Group, based in San Francisco, London and Fort Worth, Texas, is a private investment partnership managing over $13 billion in assets.

The closing of the sale of the minority equity interest in FIS is subject to certain conditions, including the signing of a definitive stock purchase agreement. Under the proposed agreement, William P. Foley II would remain chairman of the board and CEO of FNIS, and THL and TPG would receive proportional representation on the FNIS Board of Directors.

“We have investigated a significant number of alternatives to begin to recognize the embedded value of FIS, our financial processing business,” said Chairman and CEO William P. Foley II. “We believe that the recapitalization of FIS and subsequent $10 per share special cash dividend to FNF stockholders provides significant, immediate value to our stockholders, while allowing FNF to recoup its entire investment in FIS in a tax effective manner.”

Fidelity will hold a conference call Thursday, Dec. 9, at 10:30 a.m. EST.


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