Summary
On June 24, 2009, Automatic Data Processing, Inc. (ADP) announced the execution of a new $2.25 billion 364-Day Credit Agreement. This new facility replaces a similar expiring credit line and maintains ADP's access to significant short-term liquidity. The agreement provides for two borrowing options: a competitive advance option via an auction mechanism and a committed revolving credit option, both allowing for reborrowing of repaid amounts. This demonstrates the company's proactive approach to managing its working capital needs and ensuring financial flexibility during potentially uncertain economic times.
Key Highlights
- 1ADP entered into a new $2.25 billion 364-Day Credit Agreement, replacing an expiring facility of the same size.
- 2The new credit facility provides access to short-term funding, crucial for managing working capital and operational needs.
- 3Two borrowing options are available: a competitive advance facility through an auction and a committed revolving credit facility.
- 4The facility has an expiration date of June 23, 2010, with a potential extension for borrowings to June 23, 2011, at ADP's option.
- 5Interest rates are variable, tied to LIBOR or a base rate, with an 'Applicable Rate' influenced by the Markit CDX North American Investment Grade Index.
- 6The agreement includes customary covenants and events of default, similar to the previous facility, aimed at protecting lenders while allowing operational flexibility for ADP.
- 7Borrowings under the facility are intended for general corporate purposes.