What happened to the previous $1.5 billion bridge facility?

The $1.5 billion bridge credit facility was terminated in its entirety on June 12, 2017, because Moody's secured the necessary financing for its acquisition through the new term loan and the senior notes offering.

Are there any specific conditions or risks associated with the new debt?

Yes, the new debt instruments have covenants that restrict certain corporate actions like mergers and asset sales. Additionally, there's a risk of a special mandatory redemption for the notes at a premium (101%) if the Bureau van Dijk acquisition does not close by January 29, 2018, or if the purchase agreement is terminated.

How do the new financing arrangements impact Moody's existing credit lines?

Moody's amended its revolving credit agreement to reflect lower borrowing rates and adjusted its Total Debt to EBITDA financial covenant. This covenant was modified to allow for a slightly higher ratio (up to 4.5 to 1.0) for the first three fiscal quarters post-acquisition closing, before reverting to 4.0 to 1.0 thereafter, indicating flexibility to manage increased leverage during the integration period.

MCO 8-K: Material Agreements & Financial Events

Q: What is the primary purpose of the new financing arrangements?

The primary purpose of the new $500 million term loan facility and the $1 billion senior notes offering is to fund Moody's planned acquisition of Bureau van Dijk Electronic Publishing B.V., along with associated fees and expenses, and potentially to repay certain indebtedness of the target companies.

Summary

Moody's Corporation (MCO) filed an 8-K on June 12, 2017, detailing significant financing activities related to its planned acquisition of Bureau van Dijk Electronic Publishing B.V. The company entered into a new $500 million term loan facility and concurrently closed a $1 billion private offering of senior notes (split between 2023 and 2028 maturities). These actions are primarily intended to fund the acquisition of Bureau van Dijk and associated expenses. The filing also indicates an amendment to the company's existing revolving credit agreement, which lowers borrowing rates and adjusts financial covenants related to the Total Debt to EBITDA ratio, particularly in connection with the acquisition's closing. Furthermore, the company terminated its $1.5 billion bridge credit facility, as its financing needs have been met through the new debt issuances. These moves signal a strategic step for Moody's to expand its business intelligence offerings.

Key Highlights

1Moody's entered into a new $500 million term loan facility, maturing on June 6, 2020, to fund the acquisition of Bureau van Dijk.
2The company successfully closed a $1 billion debt offering, consisting of $500 million in 2.625% Senior Notes due 2023 and $500 million in 3.250% Senior Notes due 2028.
3Proceeds from the term loan and notes will be used to finance the acquisition of Bureau van Dijk Electronic Publishing B.V., related fees, and potentially repay target company debt.
4The existing $1.5 billion bridge credit facility was terminated on June 12, 2017, due to the successful completion of the new financing.
5Moody's amended its revolving credit agreement to lower interest rates and adjust the Total Debt to EBITDA covenant, accommodating the acquisition.
6The term loan and notes carry covenants that restrict mergers, asset sales, and incurrence of liens, among other limitations.
7A special mandatory redemption clause exists for the notes if the acquisition does not close by January 29, 2018, requiring a redemption at 101% of principal.

MOODYS CORP /DE/ 8-K Report, Material Agreement (Jun 12, 2017)

Summary

Key Highlights

Frequently Asked Questions