8-KEarnings & ResultsMaterial AgreementsFinancial Events

BROWN & BROWN, INC. 8-K Report, Material Agreement (Apr 22, 2014)

Filed April 22, 2014For Securities:BRO

Summary

Brown & Brown, Inc. (BRO) announced on April 22, 2014, the entry into a significant material definitive agreement: a new credit facility. This facility includes an unsecured revolving credit line of $800 million and unsecured term loans totaling $550 million, with the potential to increase the aggregate to $1.85 billion. This new credit facility is crucial as it will fund the company's previously announced acquisition of The Wright Insurance Group, expected to close in May 2014. The terms of the credit facility indicate flexibility and a focus on financial performance, with interest rates and fees tied to the company's net debt leverage ratio and long-term debt ratings from Moody's and S&P. The revolving facility has a five-year term, and the term loans are also repayable over five years from the initial funding. The facility also includes standard provisions such as covenants, limitations, and events of default, as well as options for extension.

Key Highlights

  • 1Brown & Brown, Inc. entered into a material definitive agreement for a new credit facility on April 17, 2014.
  • 2The new facility comprises an $800 million unsecured revolving credit facility and $550 million in unsecured term loans.
  • 3The total facility size can be increased up to an aggregate of $1.85 billion, subject to lender discretion.
  • 4This credit facility is intended to finance the acquisition of The Wright Insurance Group, expected to close in May 2014.
  • 5Interest rates and fees are variable, based on the company's net debt leverage ratio or debt ratings from Moody's and S&P.
  • 6The revolving credit facility is set to mature in five years, and term loans are repayable over five years from the initial funding.
  • 7The facility includes provisions for letters of credit and swing line loans, along with customary covenants and events of default.

Frequently Asked Questions

The primary purpose of this new credit agreement is to provide financing for Brown & Brown, Inc.'s previously announced acquisition of The Wright Insurance Group, which is expected to close in May 2014.

The initial aggregate amount under the credit facility is $1.35 billion, consisting of an $800 million revolving credit facility and $550 million in term loans. However, the facility has the potential to be increased up to an aggregate of $1.85 billion.

Interest rates and facility fees are determined based on a tiered structure linked to Brown & Brown's net debt leverage ratio or its non-credit enhanced senior unsecured long-term debt rating as assessed by Moody's Investor Service and Standard & Poor’s Rating Service.

The revolving credit facility is repayable in five years. The term loans are also repayable over a five-year term from the date of first funding. The overall facility terminates on April 16, 2019, with potential for two one-year extensions.