Automatic Data Processing gets $3.75 billion 364-day credit facility

By Rebecca Melvin

Concord, N.H., June 10 – Automatic Data Processing, Inc. entered into a $3.75 billion 364-day credit agreement and a $3.2 billion five-year credit agreement with a group of lenders on Wednesday, according to an 8-K filing with the Securities and Exchange Commission.

The five-year facility contains an accordion feature under which the total commitment can be increased by $500 million to $3.7 billion, subject to the availability of additional commitments.

The 364-day facility replaced the company’s prior $3.23 billion 364-day facility, entered into on June 10, 2020, and the five-year facility replaced the prior $3.75 billion five-year facility, entered into on June 13, 2018; both were terminated on June 9.

JPMorgan Chase Bank, NA acts as administrative agent, and Bank of America, NA, BNP Paribas, Wells Fargo Bank, NA and Deutsche Bank Securities Inc., as syndication agents for both credit facilities.

The existing $2.75 billion five-year credit agreement entered into on June 12, 2019 will continue.

Two borrowing options will be available under the facilities, including a competitive advance option and a revolving credit option, which in the case of the five-year facility will comprise U.S., Canadian and euro tranche loans. The competitive advance option will be provided on an uncommitted competitive advance basis through an auction. The revolving credit will be provided on a committed basis. Under each option, amounts borrowed and repaid may be reborrowed subject to availability under each facility.

The lenders’ commitments under the 364-day facility expire on June 8, 2022, and they expire under the five-year facility on June 9, 2026.

There is the possibility of a one-year extension under the five-year facility.

At the company’s option, under the 364-day facility, revolving loans denominated in dollars will bear interest at Libor plus 100 basis points.

In addition, the company will pay a commitment fee at a rate of 1.75 bps per annum on the 364-day facility, and, in the case of the five-year facility, ranging from 4 bps to 10 bps as determined by the company’s issuer ratings. 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 8, 2022.

The new facility replaces the company’s prior $3.225 billion 364-day facility entered into on June 11, 2020.

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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