Summary
On June 7, 2013, The Travelers Companies, Inc. (TRV) entered into a new $1.0 billion five-year revolving credit agreement, replacing its previous three-year facility. This new agreement, which expires in June 2018, enhances the company's financial flexibility by providing access to a significant line of credit for general corporate purposes. The credit agreement includes provisions for interest rates based on either a base rate or Eurodollar rate, plus specified margins, and a facility fee on commitments. Importantly, the terms are tied to the company's long-term senior unsecured debt ratings, indicating a cost of capital that can fluctuate with financial strength. The agreement also contains covenants related to maintaining consolidated net worth over goodwill and other intangible assets, and standard restrictive covenants and events of default, including a change in control clause.
Key Highlights
- 1TRV secured a new $1.0 billion, five-year revolving credit facility maturing on June 7, 2018.
- 2The new credit agreement replaces a prior $1.0 billion three-year revolving credit agreement.
- 3Borrowings under the facility can be used for general corporate purposes.
- 4Interest rates are variable, based on a base rate or Eurodollar rate plus a specified margin.
- 5A facility fee is payable on lender commitments, irrespective of usage.
- 6The credit agreement includes covenants related to consolidated net worth and has an option to increase the facility size up to $1.5 billion.
- 7The terms of the credit agreement are influenced by TRV's long-term senior unsecured debt ratings.