Summary
Automatic Data Processing, Inc. (ADP) has announced a significant update to its credit facilities as of June 30, 2023. The company has entered into two new credit agreements: a $4.25 billion 364-day facility and a $2.25 billion five-year facility. These new facilities replace existing credit lines that were terminated on the same date. The 364-day facility allows for potential extension by one year, while the five-year facility has an accordion feature permitting an increase of up to $500 million and also offers the option for annual commitment extensions. In addition to establishing new credit lines, ADP also amended its existing five-year credit agreement to transition from LIBOR-based interest rates to SOFR-based rates, along with other technical adjustments. These credit facilities provide ADP with substantial liquidity for general corporate purposes, offering various borrowing options including competitive advance and revolving credit facilities. The terms include standard covenants and events of default, with major financial institutions acting as administrative and syndication agents.
Key Highlights
- 1ADP has secured new credit facilities totaling $6.5 billion ($4.25 billion 364-day and $2.25 billion five-year).
- 2The new facilities replace prior credit lines and provide significant liquidity for general corporate purposes.
- 3The five-year facility includes an accordion feature allowing for an expansion of up to $500 million.
- 4Existing credit agreements have been amended to replace LIBOR-based interest rates with SOFR-based rates.
- 5The 364-day facility has a maturity in June 2024, with a potential one-year extension.
- 6The new five-year facility matures in June 2028, with options for annual commitment extensions.
- 7The company's borrowing subsidiaries are guaranteed by ADP for obligations under these facilities.