8-KMaterial AgreementsFinancial EventsExhibits & Filings

CME GROUP INC. 8-K Report, Material Agreement (Aug 1, 2007)

Filed August 1, 2007For Securities:CME

Summary

CME Group Inc. (CME) has filed an 8-K report detailing the establishment of a $3.0 billion, 364-day revolving Bridge Credit Facility. This facility is designed to serve as a backstop for a planned Commercial Paper Facility of the same amount. The primary uses of the funds from the Bridge Credit Facility are to support a fixed-price tender offer for up to 6,250,000 shares of Class A common stock at $560.00 per share, to cover transaction-related fees for the recent merger with CBOT Holdings, Inc., and for general corporate purposes up to $300 million. This financial arrangement is a significant event for investors as it directly relates to capital management following the CBOT merger and a substantial share repurchase program. The terms of the facility include provisions for voluntary and mandatory prepayments, stringent conditions for borrowing tied to credit ratings (A-2/P-2 or better), and covenants related to financial health, such as maintaining a minimum Consolidated Net Worth. The ability to secure this facility underscores CME's financial standing and its proactive approach to managing liquidity and shareholder returns.

Key Highlights

  • 1CME Group Inc. has secured a $3.0 billion, 364-day revolving Bridge Credit Facility.
  • 2The Bridge Credit Facility will backstop a planned $3.0 billion Commercial Paper Facility.
  • 3Proceeds will fund a tender offer to repurchase up to 6,250,000 shares of Class A common stock at $560.00 per share.
  • 4Funds will also cover fees and expenses related to the merger with CBOT Holdings, Inc.
  • 5The facility allows for general corporate purposes up to $300 million.
  • 6Borrowing is conditional on CME's senior unsecured non-credit-enhanced indebtedness maintaining ratings of at least A-2 (S&P) and P-2 (Moody's).
  • 7Covenants include maintaining a minimum Consolidated Net Worth relative to a pro forma basis after the CBOT merger and tender offer.

Frequently Asked Questions

The primary purpose of the Bridge Credit Facility is to provide funding for CME Group's upcoming fixed-price tender offer to repurchase up to 6,250,000 shares of its Class A common stock at $560.00 per share. It also serves to cover merger-related expenses from the CBOT Holdings, Inc. acquisition and provides a backstop for a planned Commercial Paper Facility.

Key conditions include customary requirements like the absence of defaults and accuracy of representations. Importantly, initial borrowings are subject to satisfactory pro forma financial statements and demonstrated efforts to place commercial paper. Subsequent borrowings (for purposes other than commercial paper support) require CME's short-term debt rating to be at least A-2 from S&P and P-2 from Moody's, with no negative surveillance or review announced by these agencies.

The facility provides significant financial flexibility by securing a large amount of capital, which enables CME to execute its announced share repurchase program and manage post-merger expenses effectively. This demonstrates a commitment to returning capital to shareholders through buybacks, while also ensuring adequate liquidity for its operations.

The merger with CBOT Holdings, Inc., which closed on July 12, 2007, is a significant factor. The Bridge Credit Facility will be used to pay fees and expenses associated with this merger. Furthermore, covenants within the facility, such as the Consolidated Net Worth requirement, are calculated on a pro forma basis that gives effect to this merger, indicating its substantial impact on CME's financial structure.