8-KMaterial AgreementsFinancial EventsExhibits & Filings

Aon plc 8-K Report, Material Agreement (Oct 20, 2017)

Filed October 20, 2017For Securities:AON

Summary

Aon plc (AON) filed an 8-K on October 20, 2017, to disclose the entry into a new $400 million unsecured revolving credit facility. This five-year agreement, effective October 19, 2017, provides Aon plc and its designated subsidiaries with the ability to borrow in U.S. dollars, pounds sterling, or euros. The facility's primary purpose is to enhance liquidity and financial flexibility. The credit agreement includes provisions for interest rates based on either a eurocurrency rate (linked to LIBOR or EURIBOR) or an alternate base rate, with margins tied to Aon's public debt rating. Key financial covenants are in place, including minimum consolidated adjusted EBITDA to consolidated interest expense ratios and maximum consolidated funded debt to consolidated adjusted EBITDA ratios, designed to ensure continued financial health and responsible leverage. The facility matures on October 19, 2022, with options for two one-year extensions.

Key Highlights

  • 1Aon plc secured a new $400 million unsecured revolving credit facility.
  • 2The credit agreement has a five-year term, maturing on October 19, 2022, with potential for two one-year extensions.
  • 3Borrowings can be made in U.S. dollars, pounds sterling, or euros.
  • 4Interest rates are variable, based on either a eurocurrency rate (LIBOR/EURIBOR) or an alternate base rate, plus an applicable margin.
  • 5The applicable margin is linked to Aon's public debt rating.
  • 6Key financial covenants include a minimum EBITDA to interest expense ratio (4.00:1.00) and a maximum debt to EBITDA ratio (3.25:1.00).
  • 7Citibank, N.A. is the administrative agent, with HSBC Bank USA, National Association as syndication agent.

Frequently Asked Questions

The primary purpose of this $400 million unsecured revolving credit facility is to provide Aon plc and its designated subsidiaries with enhanced financial flexibility and liquidity. It serves as a source of funds for general corporate purposes.

The credit agreement includes two main financial covenants: 1) a minimum consolidated adjusted EBITDA to consolidated interest expense ratio of 4.00 to 1.00, and 2) a maximum consolidated funded debt to consolidated adjusted EBITDA ratio of 3.25 to 1.00, subject to certain exceptions. These covenants are designed to ensure the company maintains a healthy financial profile.

Borrowings can bear interest at the borrower's option based on either a eurocurrency rate (which utilizes LIBOR for USD/GBP or EURIBOR for EUR, adjusted for reserve requirements) or an alternate base rate. Both rates are subject to an 'applicable margin' that varies based on Aon's public debt rating. Currently, the applicable margin for alternate base rate advances is zero, and for eurocurrency advances, it is 100 basis points.

The revolving credit agreement has an initial maturity date of October 19, 2022. However, it includes provisions for two optional one-year extensions, potentially extending its availability.