Summary
Arch Capital Group Ltd. (ACGL) has filed an 8-K report to disclose the entry into a Third Amended and Restated Credit Agreement, effective December 17, 2019. This agreement consolidates and amends previous credit facilities, establishing a new Senior Credit Facility totaling $750 million. This facility includes a $250 million secured Tranche A Facility for letters of credit and a $500 million unsecured Tranche B Facility for revolving loans and letters of credit. The company retains the option to increase the Senior Credit Facility to an aggregate of $1.25 billion, subject to market conditions and lender commitments.
Key Highlights
- 1Arch Capital Group Ltd. (ACGL) entered into a new $750 million Senior Credit Facility, comprising a $250 million secured letter of credit facility (Tranche A) and a $500 million unsecured revolving loan and letter of credit facility (Tranche B).
- 2The Senior Credit Facility has an accordion feature allowing for an aggregate increase up to $1.25 billion, subject to obtaining necessary commitments.
- 3The credit agreement has a maturity date of December 17, 2024, with all outstanding loans due on this date and letters of credit not expiring beyond this date.
- 4The agreement includes customary covenants, representations, warranties, and events of default.
- 5Key financial covenants include maintaining specific credit ratings for designated subsidiary borrowers (B++ by A.M. Best or BBB+ by S&P), a maximum consolidated leverage ratio for ACGL, and minimum consolidated tangible net worth for ACGL and its reinsurance subsidiaries.
- 6Certain subsidiaries are designated as Borrowers, with specific guarantees provided by ACGL and its U.S. subsidiaries.
- 7The Credit Agreement amends and restates the prior credit agreement dated October 26, 2016.
Frequently Asked Questions
The new Senior Credit Facility totals $750 million. It is comprised of a $250 million secured facility for letters of credit (Tranche A) and a $500 million unsecured facility for revolving loans and letters of credit (Tranche B).
Yes, the Senior Credit Facility has an 'accordion' feature that allows for an aggregate increase of up to $1.25 billion, provided the company receives the necessary commitments from lenders.
The commitments under the Credit Agreement expire on December 17, 2024. All loans outstanding at that time must be repaid, and letters of credit issued under the agreement will not have an expiration date later than December 17, 2024.
The agreement requires designated subsidiary borrowers (with some exceptions) to maintain a financial strength rating of at least 'B++' from A.M. Best or 'BBB+' from S&P. Additionally, ACGL must comply with a maximum consolidated leverage ratio, and ACGL and its primary reinsurance entities must maintain minimum consolidated tangible net worth.