Automatic Data Processing, Inc. (ADP, Financial) has announced the successful arrangement of two significant credit facilities, enhancing its financial flexibility and liquidity. The company has entered into a $4.55 billion 364-Day Credit Agreement and a $2.5 billion Five-Year Credit Agreement with a consortium of lenders. These agreements, collectively referred to as the "New Facilities," replace previous credit arrangements and are designed to support ADP's general corporate purposes.
The Five-Year Facility includes an accordion feature, allowing for an increase in the aggregate commitment by $500 million, potentially raising the total to $3 billion, subject to additional commitments. The 364-Day Facility replaces a similar facility from the previous year, while the Five-Year Facility supersedes a prior $2.25 billion agreement.
JPMorgan Chase Bank, N.A. serves as the Administrative Agent, with Bank of America, N.A., BNP Paribas, Wells Fargo Bank, N.A., and Deutsche Bank Securities Inc. acting as Syndication Agents. The New Facilities offer a revolving credit option, enabling ADP to borrow, repay, and reborrow funds as needed, subject to availability.
The 364-Day Facility's commitments will expire on June 26, 2026, with an option for extension to June 26, 2027, while the Five-Year Facility will mature on June 27, 2030. ADP retains the option to request annual extensions of the Five-Year Facility's commitments.
Interest rates for the revolving loans under each facility are based on a margin over a Term SOFR-based rate or a floating rate determined by the highest of the prime rate, the federal funds effective rate plus 0.50%, or a Term SOFR-based rate plus 1% per annum. Additionally, ADP will incur a commitment fee on unused commitments, varying by facility and determined by the company's issuer rating.
The New Facilities maintain terms similar to the previous agreements, including covenants restricting the creation of liens, sale and leaseback transactions, and significant asset transfers. They also include customary default events that could lead to loan acceleration.
ADP has committed to guaranteeing obligations of its subsidiaries eligible to borrow under the New Facilities. The funds are intended for general corporate purposes, providing ADP with enhanced financial agility.
The arrangement of these facilities was led by J.P. Morgan Chase Bank, N.A., BofA Securities, Inc., BNP Paribas Securities Corp., Wells Fargo Securities, LLC, and Deutsche Bank Securities Inc., with Barclays Bank PLC and MUFG Bank, Ltd. serving as Documentation Agents.
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