Automatic Data closes $6.55 billion 364-day, five-year facilities

By Sarah Lizee

Olympia, Wash., June 13 – Automatic Data Processing, Inc. entered into a $3.8 billion 364-day credit agreement and a $2.75 billion five-year credit agreement on Wednesday with JPMorgan Chase Bank, NA as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

The five-year facility contains a $500 million accordion feature.

The 364-day facility replaced the company’s prior $3.8 billion 364-day facility, entered into on June 13, 2018, and the five-year facility replaced the company’s prior $2.25 billion five-year facility, entered into on June 14, 2017, both of which were terminated on Wednesday.

The existing $3.75 billion five-year credit agreement entered into on June 13, 2018 will continue in full force and effect, the filing noted.

Two borrowing options will be available under the new facilities: a competitive advance option and a revolving credit option. The competitive advance option will be provided on an uncommitted competitive advance basis through an auction mechanism. The revolving credit will be provided on a committed basis.

Commitments under the 364-day facility will expire on June 10, 2020, and commitments under the five-year facility will expire on June 12, 2024.

The company may, from time to time and by written notice given not fewer than 30 days and not more than 120 days prior to any anniversary of the closing date, request that the lenders extend the commitments under the five-year facility for an additional period of one year.

Under each facility, interest under a competitive advance option will be payable at the rates obtained from bids selected by the company in accordance with the competitive auction procedures set forth in each facility.

The applicable margin for the 364-day loan is 40% of the Markit CDX.NA.IG Series 32 index with a floor of 20 basis points to the termination date and a floor of 30 bps after that. The applicable margin for the five-year facility ranges from 40% to 65% of the index with a floor ranging from 30 bps to 50 bps, in each case depending on the company’s credit rating.

In addition, the company will pay a commitment fee on unused commitments. In the case of the 364-day facility, the fee is 1.75 bps, and in the case of the five-year facility, the fee will range from 4 bps to 10 bps, depending on the company’s rating.

Also, the company will pay a term-out fee of 0.75% of the amount of any loans outstanding under the 364-day facility after June 10, 2020.

The facilities are led by J.P. Morgan Chase Bank, BofA Securities, Inc., BNP Paribas Securities Corp., Wells Fargo Securities, LLC, Citibank, NA, MUFG Bank, Ltd. and Deutsche Bank Securities Inc. as joint lead arrangers and joint bookrunners. Barclays Bank plc is documentation agent for each of the facilities.

Bank of America, NA, BNP Paribas, Wells Fargo Bank, NA, Citibank, MUFG Bank, and Deutsche Bank are syndication agents.

Automatic Data provides business outsourcing and computing services to automobile and heavy equipment dealers. It is based in Roseland, N.J.

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