Summary
Automatic Data Processing, Inc. (ADP) announced on June 13, 2018, the execution of two significant credit agreements totaling $7.55 billion in borrowing capacity. These agreements include a $3.80 billion 364-day credit facility and a $3.75 billion five-year credit facility. These new facilities replace and increase the size of the company's previous credit lines, demonstrating robust access to liquidity and potentially reflecting confidence in ADP's financial standing. The establishment of these credit facilities provides ADP with substantial financial flexibility for general corporate purposes. The details of the agreements indicate various borrowing options and interest rate structures, including floating rates tied to LIBOR and prime rates, as well as competitive advance options. The company's ability to secure these large credit lines, particularly the expanded five-year facility with an accordion feature allowing for an additional $500 million, suggests a strong relationship with its banking partners and a proactive approach to managing its capital structure.
Key Highlights
- 1ADP entered into a $3.80 billion 364-day credit facility and a $3.75 billion five-year credit facility on June 13, 2018.
- 2The new facilities replace and increase the capacity of previous credit lines, which were terminated on the same date.
- 3The five-year facility includes an accordion feature allowing for an increase in commitments by $500 million to $4.25 billion.
- 4Borrowings under the facilities can be used for general corporate purposes.
- 5The agreements offer competitive advance and revolving credit options with various interest rate mechanisms, including LIBOR-based and prime rate options.
- 6The commitments under the 364-day facility expire on June 12, 2019, while the five-year facility commitments expire on June 13, 2023, with an option for annual extensions.
- 7Key financial institutions including JPMorgan Chase Bank, N.A. and Bank of America, N.A. are acting as administrative and syndication agents for these facilities.