8-KMaterial AgreementsFinancial EventsExhibits & Filings

AMERIPRISE FINANCIAL INC 8-K Report, Material Agreement (Nov 23, 2011)

Filed November 23, 2011For Securities:AMP

Summary

Ameriprise Financial, Inc. (AMP) filed an 8-K on November 23, 2011, announcing the entry into a new $500 million unsecured revolving credit facility, with an option to increase it to $750 million. This new facility, effective November 22, 2011, replaces a previous credit facility that was terminated concurrently. The new credit agreement provides flexibility for working capital and general corporate purposes, including revolving loans, swing line loans, bid loans, and letters of credit. The interest rate on borrowings under the new facility will be based on a market rate plus an applicable margin tied to Ameriprise's senior unsecured long-term debt rating. The agreement includes customary covenants, such as maintaining a consolidated net worth of at least $6.886 billion (with adjustments) and keeping the consolidated leverage ratio below 40%. The facility expires on November 22, 2015. This action signifies a refinancing of its credit lines, likely aimed at optimizing its capital structure and ensuring liquidity.

Key Highlights

  • 1Entry into a new $500 million unsecured revolving credit facility with an option to increase to $750 million.
  • 2The new credit facility has a maturity date of November 22, 2015.
  • 3The facility can be used for working capital and general corporate purposes, including loans and letters of credit.
  • 4Interest rates are variable, based on a market rate plus an applicable margin tied to the company's debt rating.
  • 5The agreement includes financial covenants requiring a minimum consolidated net worth and a maximum consolidated leverage ratio.
  • 6Concurrent termination of the previous credit facility, originally set to expire November 30, 2011.
  • 7The new credit facility is unsecured.

Frequently Asked Questions

The primary purpose of this 8-K filing is to announce Ameriprise Financial's entry into a new, material definitive agreement: a $500 million unsecured revolving credit facility. It also reports the termination of their previous credit facility.

The new facility is for up to $500 million, expandable to $750 million, matures on November 22, 2015, and is unsecured. It can be used for working capital and general corporate purposes. Interest rates are variable, and the agreement contains financial covenants related to net worth and leverage.

Companies typically replace or refinance credit facilities to secure more favorable terms (such as lower interest rates or fees), extend maturity dates, increase borrowing capacity, or align with current market conditions and the company's financial strategy. In this case, the new facility provides a longer maturity and maintains a significant borrowing capacity.

The key financial covenants require Ameriprise to maintain a consolidated net worth of at least $6.886 billion (with certain adjustments) and to not permit its consolidated leverage ratio to exceed 40 percent. These are designed to ensure the company maintains a healthy financial position.