Summary
The St. Paul Travelers Companies, Inc. (TRV) has entered into a new $1.0 billion, five-year revolving credit agreement, replacing and consolidating three previous credit facilities totaling $730 million. This significant increase in borrowing capacity, coupled with an option to further increase it to $1.5 billion under certain conditions, provides the company with enhanced financial flexibility for general corporate purposes. The new agreement, effective June 10, 2005, matures on June 10, 2010, and is unsecured. It includes covenants requiring the company to maintain a minimum consolidated net worth exceeding goodwill by $10 billion and a maximum debt-to-total capital ratio of 0.40:1.00. Investors should note the stronger financial footing and increased liquidity this new credit facility offers, while also being mindful of the covenants designed to maintain a healthy balance sheet.
Key Highlights
- 1Entered into a new $1.0 billion, five-year revolving credit agreement, effective June 10, 2005.
- 2The new credit facility consolidates and replaces three prior credit agreements totaling $730 million.
- 3The company has the option to increase the facility size up to $1.5 billion, subject to conditions.
- 4Borrowings under the agreement can be used for general corporate purposes.
- 5The credit agreement is unsecured and matures on June 10, 2010.
- 6Key financial covenants include maintaining consolidated net worth over goodwill by at least $10 billion and a debt-to-total capital ratio not exceeding 0.40:1.00.