Workday enters into $750 million term loan, $750 million revolver

By Sarah Lizee

Olympia, Wash., April 6 – Workday, Inc. entered into a credit agreement on Thursday with Bank of America, NA as administrative agent, providing for a $750 million term loan and a $750 million revolver, according to an 8-K filing with the Securities and Exchange Commission.

Revolving loans may be borrowed, repaid and reborrowed until April 2, 2025, at which time all amounts borrowed must be repaid. Workday may request, no more than two times during the term of the credit agreement, that each revolving lender extend the maturity date for the revolving loans for one year.

The term loan may be drawn in two individual drawings, including at the closing date for up to $500 million and prior to July 15 for up to $250 million, subject to some customary conditions.

The term loans mature on April 2, 2025 and provide for quarterly repayment in installments beginning in October at a rate of 1.25% of the principal amount per quarter through January 2022 and 2.5% of the principal amount per quarter onwards.

As of Thursday, Workday had an outstanding term loan of $500 million and had no outstanding revolving loans under the credit agreement.

Loans bear interest at Libor plus 100 basis points to 162.5 bps, and the commitment fee and ticking fee ranges from 9 bps to 22.5 bps, in each case depending on Workday’s consolidated leverage ratio. At closing, interest was Libor plus 125 bps and the commitment fee was 15 bps.

Loans may be denominated in dollars, euros, sterling and Canadian dollars, together with any other currency that is approved by the administrative agent. Loans denominated in alternative currencies may not exceed an aggregate of $375 million.

A financial covenant, based on a quarterly financial test, requires Workday not to exceed a maximum leverage ratio of 3.5 to 1.0, subject to a step-up to 4.5 to 1.0 at the election of Workday for a certain period following an acquisition.

BofA Securities, Inc. and Wells Fargo Securities, LLC are the joint lead arrangers and joint bookrunners. Wells Fargo is the syndication agent and Truist Bank and U.S. Bank NA are the co-documentation agents.

Workday is a provider of financial management and human capital management software.

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