What is the primary purpose of these new credit facilities for ADP?

The primary purpose of these new credit facilities is to provide Automatic Data Processing, Inc. (ADP) with substantial liquidity for general corporate purposes. This ensures the company has access to funds for operational needs, strategic initiatives, or other financial requirements.

How do these new credit facilities compare to ADP's previous ones?

The new facilities replace ADP's prior 364-day and five-year credit agreements. The total committed amount across the new facilities is $5.75 billion ($3.50 billion for 364-day and $2.25 billion for five-year), which is a slight increase from the previous total of $5.5 billion ($3.25 billion for 364-day and $2.25 billion for five-year, plus an existing $3.75 billion five-year agreement that remains in effect). The structure and key terms are generally similar, with updated expiration dates and banking syndicate members.

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

The accordion feature allows ADP the flexibility to increase the aggregate commitment under the five-year credit facility by up to an additional $500 million. This means ADP can potentially borrow more under this facility if needed, subject to the availability of additional commitments from lenders, without needing to enter into entirely new credit agreements.

What are the maturity dates for these new credit facilities?

The commitments under the 364-day facility expire on June 13, 2018, with borrowings due on that date (or potentially extended to June 13, 2019, at ADP's option). The commitments and borrowings under the five-year facility mature on June 14, 2022, with an option for ADP to request extensions for additional one-year periods.

ADP 8-K: Material Agreements & Financial Events

Summary

Automatic Data Processing, Inc. (ADP) announced on June 14, 2017, the entry into two new credit agreements totaling $5.75 billion. The company secured a $3.50 billion 364-day credit facility and a $2.25 billion five-year credit facility, replacing previously existing agreements. These new facilities provide ADP with significant liquidity for general corporate purposes, demonstrating the company's continued access to substantial credit markets. The five-year facility also includes an accordion feature allowing for an additional $500 million in commitments, offering flexibility for future funding needs.

Key Highlights

1ADP entered into a new $3.50 billion 364-day credit facility and a $2.25 billion five-year credit facility, effective June 14, 2017.
2These new facilities replace prior credit agreements that were terminated on the same date.
3The five-year credit facility has an accordion feature allowing for an increase in commitments by up to $500 million.
4Borrowings under the new facilities can be utilized for general corporate purposes.
5The agreements offer both competitive advance and revolving credit options, providing flexibility in accessing funds.
6Interest rates are variable, based on LIBOR or prime rates, with commitment fees and a term-out fee for the 364-day facility.
7Standard covenants and events of default, similar to previous agreements, are included, with a guarantee from ADP for subsidiary obligations.

AUTOMATIC DATA PROCESSING INC 8-K Report, Material Agreement (Jun 15, 2017)

Summary

Key Highlights

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