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Arthur J. Gallagher & Co. 8-K Report, Material Agreement (Sep 20, 2013)

Filed September 20, 2013For Securities:AJG

Summary

Arthur J. Gallagher & Co. (AJG) filed an 8-K on September 20, 2013, to report on a significant update to its credit facilities. The company entered into a new, larger, unsecured multicurrency credit agreement, replacing its previous $500.0 million revolving credit facility. This new agreement increases AJG's borrowing capacity and extends its maturity, providing enhanced financial flexibility for future operations and growth. The new Credit Agreement, effective September 19, 2013, is for a total of $600.0 million with an option to increase up to $850.0 million, and matures on September 19, 2018. This provides AJG with a $100 million increase in its committed borrowing capacity compared to the prior agreement. The company also reported initial borrowings of $150.7 million, which included the transfer of $15.2 million in outstanding letters of credit from the terminated facility, indicating that the company is leveraging its new credit line.

Key Highlights

  • 1Arthur J. Gallagher & Co. (AJG) has entered into a new unsecured multicurrency credit agreement (the "Credit Agreement") effective September 19, 2013.
  • 2The new Credit Agreement increases the total revolving credit commitment to $600.0 million, with a provision for up to $850.0 million with certain conditions.
  • 3This new facility replaces a previous $500.0 million revolving credit facility, representing a $100 million increase in committed borrowing capacity.
  • 4The Credit Agreement has a maturity date of September 19, 2018, extending the company's access to funding for five years.
  • 5As of September 19, 2013, there were $150.7 million in borrowings outstanding under the new agreement, including $15.2 million in letters of credit transferred from the previous facility.
  • 6Interest rates are variable, based on either a base rate or adjusted LIBOR, with a margin of 0.85% to 1.45% depending on the financial leverage ratio.
  • 7The agreement includes covenants related to financial leverage ratio and net worth maintenance, as well as standard events of default.

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