CDW Corp Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by CDW Corporation on April 29, 2013. The filing discloses the entry into a new material definitive agreement regarding the company's debt financing structure.
Key Financial Metrics and Debt Structure
The filing details a refinancing transaction involving a new seven-year senior secured term loan facility with a principal amount of $1,350.0 million. Key terms include:
- Interest Rate: Borrowings bear interest at either the Alternate Base Rate (ABR) plus a margin or LIBOR plus a margin. LIBOR is subject to a floor of 1.00% per annum.
- Margin Reductions:
- ABR margins reduced from 1.75%-3.00% to 1.25%-1.50%.
- LIBOR margins reduced from 2.75%-4.00% to 2.25%-2.50%.
- Maturity Extension: The maturity of senior secured term loans is extended to 2020, replacing prior maturities of 2014 and 2017.
- Amortization: Quarterly amortization is set at 0.25% of the principal amount.
- Incremental Capacity: Maximum new incremental term loan commitments increased from $300 million to $500 million.
The filing does not provide specific values for revenue, profit, cash flow, or operating margins as this is a transactional report rather than a periodic financial statement.
Material Changes Versus Prior Period
The new Term Loan Agreement replaces the Prior Term Loan Agreement dated October 12, 2007. Material changes include:
- Elimination of all hedging requirements.
- Elimination of the senior secured leverage ratio financial covenant.
- Amendments to the guarantee and collateral agreement securing CDW's Senior Secured Notes due 2018.
Outlook, Risks, and Management Commentary
Management commentary is limited to the description of the refinancing terms. The filing notes that the descriptions of the agreements are qualified in their entirety by reference to the full text of the New Term Loan Agreement (Exhibit 10.1) and the Amended and Restated Collateral Agreement (Exhibit 10.2). No specific risks, contingencies, or unusual items beyond the standard terms of the debt agreement are disclosed in the summary text.
Key Facts for Investor Verification
- Verify the specific leverage ratio definitions and covenants in the full New Term Loan Agreement (Exhibit 10.1).
- Confirm the impact of the eliminated senior secured leverage ratio covenant on future borrowing flexibility.
- Review the Amended and Restated Collateral Agreement (Exhibit 10.2) for changes to the security interest on the 2018 Senior Secured Notes.
- Assess the interest rate savings based on current ABR and LIBOR rates compared to the prior agreement's margins.