Erie Indemnity gets $100 million senior secured delayed-draw term loan

By Marisa Wong

Morgantown, W.Va., Nov .14 – Erie Indemnity Co. entered into a credit agreement on Nov. 7 with PNC Bank, NA for a $100 million senior secured delayed-draw term loan, according to an 8-K filed Monday with the Securities and Exchange Commission.

The company may request four draws of $25 million on each of Dec. 1, June 1, 2017, Dec. 1, 2017 and June 1, 2018.

During the draw period, the company will make monthly interest-only payments. After that, the credit facility converts to a fully amortized term loan with monthly payments of principal and interest over a period of 28 years.

Borrowings will bear interest at a fixed rate of 4.35%. In addition, the company is required to pay a commitment fee of 8 basis points on the unused portion of the facility during the draw period.

Financial covenants under the credit agreement require the company to maintain its ratio of debt to net worth at less than 35% and maintain a minimum net worth.

The credit agreement also includes covenants and restrictions that are consistent with those included in the company’s amended and restated revolving credit agreement dated Oct. 25, 2013 with JPMorgan Chase Bank, NA as administrative agent.

Also on Nov. 7, the company amended its 2013 restated revolver to permit liens on marketable securities securing debt in connection with the acquisition of real property or construction of improvements on that property.

The Erie, Pa.-based company offers auto, homeowners, life and business insurance.

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