The board of directors at Jacksonville, Fla.-based Fidelity National Information Services (FIS), a provider of technology services to financial institutions, has approved pursuing a plan to spin off the firm's lender processing services (LPS) division into a separate publicly traded company.
Under current plans, the company intends to contribute the assets of LPS into a newly formed subsidiary, Newco, in exchange for 100% of Newco common stock and approximately $1.6 billion of Newco debt securities.
Following receipt of necessary Securities and Exchange Commission approvals and a tax-free ruling from the Internal Revenue Service, FIS will distribute 100% of Newco common stock to FIS shareholders in a tax-free spin-off. Immediately following the spin-off, FIS will exchange the Newco debt securities it owns for a like amount of existing FIS debt through a debt-for-debt exchange that is tax-free to FIS. FIS would then retire the FIS debt that is exchanged for the Newco debt securities.
Completion of the possible spin-off is expected to occur in mid-2008, and management and directors of FIS and Newco have not yet been determined, FIS adds.