8-KMaterial AgreementsFinancial EventsExhibits & Filings

Aon plc 8-K Report, Material Agreement (Dec 9, 2009)

Filed December 9, 2009For Securities:AON

Summary

Aon plc (AON) filed an 8-K on December 9, 2009, to report a material definitive agreement. The company entered into a new $400 million, three-year revolving credit facility with a maturity date of December 4, 2012. This new facility replaces a previous credit agreement that was terminated on the same date. Importantly, the company did not draw on either the new or the previous credit facility at the time of these transactions, indicating no immediate need for external funding. The new credit agreement includes customary covenants, such as maintaining a minimum EBITDA to interest expense ratio of 4.0 to 1.0 and a maximum borrowings to EBITDA ratio of 3.0 to 1.0. These covenants suggest a focus on maintaining financial health and managing leverage.

Key Highlights

  • 1Aon entered into a new $400 million, three-year revolving credit facility on December 4, 2009.
  • 2The new credit facility has a maturity date of December 4, 2012.
  • 3This new agreement replaces a previous credit agreement which was terminated simultaneously.
  • 4The company did not draw any funds on the new credit facility upon its establishment.
  • 5The previous credit facility was also undrawn at the time of its termination.
  • 6Key financial covenants include a minimum EBITDA to interest expense ratio of 4.0:1.0 and a maximum borrowings to EBITDA ratio of 3.0:1.0.
  • 7Several financial institutions, including Citibank and JP Morgan Chase Bank, are involved as agents and lenders in the new credit agreement.

Frequently Asked Questions

The primary purpose of this 8-K filing is to report Aon's entry into a new material definitive agreement, specifically a new credit agreement, and the termination of a previous one.

Companies often establish or renew credit facilities as a proactive measure to ensure access to capital for future operational needs, acquisitions, or unexpected events. Not drawing on the facility indicates no immediate need for funds, but having the facility in place provides financial flexibility.

The new credit agreement includes two primary financial covenants: Aon must maintain a ratio of Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) to interest expense of at least 4.0 to 1.0. Additionally, the ratio of borrowings to EBITDA must not exceed 3.0 to 1.0. These are designed to ensure the company's ability to service its debt.

Since both the previous and the new credit facilities were undrawn at the time of the transaction, there is no immediate direct financial impact in terms of debt on the balance sheet. The replacement provides Aon with updated terms, potentially better conditions, and a defined credit line for the next three years.