What is the total amount of new credit secured by ADP?

ADP has secured a total borrowing capacity of $2.75 billion through two new credit agreements: a $1.25 billion 364-day facility and a $1.5 billion five-year facility.

What is the purpose of these new credit facilities?

These credit facilities are intended for general corporate purposes, providing ADP with financial flexibility and ensuring access to funds for its operations and strategic initiatives.

How do the interest rates work under these new agreements?

Interest rates are variable. Under the 364-day facility, revolving loans can bear interest at a LIBOR-based rate or an alternative base rate. Under the five-year facility, interest is based on a LIBOR-based rate with a spread determined by ADP's credit rating, or an alternative base rate. Specific spreads and fees vary based on the facility and credit ratings.

What is the significance of the 'accordion feature' in the five-year facility?

The accordion feature allows ADP to potentially increase the borrowing capacity of the $1.5 billion five-year facility by an additional $500 million, bringing the total to $2.0 billion, subject to the availability of further commitments from lenders. This provides even greater financial flexibility if needed.

ADP 8-K: Material Agreements & Financial Events

Summary

Automatic Data Processing, Inc. (ADP) announced on June 29, 2005, the entry into two new credit agreements totaling $2.75 billion in borrowing capacity. This includes a $1.25 billion 364-day credit facility and a $1.5 billion five-year credit facility, which has an accordion feature allowing for an increase up to $2.0 billion. These new facilities replace a previous $2.25 billion 364-day facility. The primary purpose of these credit lines is for general corporate purposes, signaling ADP's proactive approach to maintaining strong liquidity and financial flexibility. The new credit agreements provide ADP with substantial access to funds and offer flexibility in borrowing options, including competitive advance and revolving credit options with various interest rate structures tied to LIBOR or base rates. The terms are largely consistent with prior agreements, including customary covenants and events of default. The company's CFO, Karen E. Dykstra, signed off on the filing, underscoring the importance of these financial arrangements for the company's operational and strategic needs.

Key Highlights

1ADP has entered into a $1.25 billion 364-day credit facility and a $1.5 billion five-year credit facility.
2The total borrowing capacity under the new facilities is $2.75 billion, replacing a previous $2.25 billion facility.
3The five-year credit facility includes an accordion feature that can increase its capacity by $500 million to $2.0 billion.
4These credit facilities are primarily for general corporate purposes, ensuring liquidity and financial flexibility.
5Borrowing options include competitive advances via an auction mechanism and committed revolving credit.
6Interest rates for revolving loans are tied to LIBOR or a base rate, with specific spreads and fees determined by credit ratings and market conditions.
7The new agreements contain customary covenants and events of default, similar to the replaced facility.

AUTOMATIC DATA PROCESSING INC 8-K Report, Material Agreement (Jul 1, 2005)

Summary

Key Highlights

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