Summary
Automatic Data Processing, Inc. (ADP) has entered into a new $3.75 billion 364-Day Credit Agreement, effective July 1, 2022. This new facility replaces a similar prior agreement and provides ADP with flexible borrowing options, including a competitive advance and a revolving credit facility. The agreement is backed by a syndicate of major financial institutions, with JPMorgan Chase Bank, N.A. serving as the Administrative Agent. The primary purpose of this credit facility is to support ADP's general corporate purposes, ensuring continued operational flexibility and financial robustness. The terms of the new agreement are largely consistent with its predecessor, featuring customary covenants and events of default. This strategic move underscores ADP's commitment to maintaining strong liquidity and readily available credit to manage its business operations and potential future needs.
Key Highlights
- 1ADP entered into a new $3.75 billion 364-Day Credit Agreement on July 1, 2022.
- 2This new facility replaces a prior $3.75 billion 364-day credit agreement that was terminated on the same date.
- 3The agreement provides two borrowing options: a competitive advance option via an auction mechanism and a committed revolving credit option.
- 4The lenders' commitments expire on June 30, 2023, with borrowings maturing on that date, or at ADP's option, extended to June 30, 2024.
- 5Key interest rate options include Term SOFR-based rates or a prime rate-based floating rate for revolving loans.
- 6ADP will pay a commitment fee of 0.0175% per annum on unused commitments and a term-out fee of 0.75% on outstanding loans after June 30, 2023.
- 7Borrowings under the facility are for general corporate purposes and are guaranteed by ADP.