CDW Corp Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by CDW Corporation on June 24, 2011. The filing discloses the entry into a new material definitive agreement regarding the company's senior secured asset-based revolving credit facility.
Key Financial Metrics and Debt Structure
The filing details a restructuring of CDW's revolving credit facility with the following specific terms:
- Facility Size: Increased from $800.0 million to $900.0 million.
- Incremental Capacity: Maximum aggregate amount for incremental increases raised from $100.0 million to $200.0 million.
- Unused Fee: Increased from 25 basis points to either 37.5 or 50 basis points, contingent on availability.
- Pricing Grid: Increased by 100 basis points.
- Administrative Agent: JPMorgan Chase Bank, N.A.
The filing text does not provide current values for revenue, profit, cash flow, margins, or total liquidity beyond the credit facility terms.
Material Changes Versus Prior Period
The new agreement replaces the Prior Revolving Loan Agreement dated October 12, 2007. Key changes include:
- Expansion of total credit availability by $100.0 million.
- Introduction of a new "springing maturity covenant" based on excess cash availability. Under this covenant, the Revolving Loan may mature 45 days prior to the maturity of the non-extended portion of CDW's senior secured term loan facility or the senior exchange notes due 2015.
- Higher costs associated with unused capacity and the pricing grid.
Outlook, Risks, and Contingencies
The filing highlights a specific contingency regarding the maturity of the new facility. The springing maturity covenant creates a risk that the facility could mature earlier than the standard five-year term if the company maintains excess cash availability relative to its other debt maturities (specifically the term loan and 2015 exchange notes). No other management commentary, guidance, or unusual items are disclosed in this report.
Investor Verification Checklist
- Verify the exact terms of the "springing maturity covenant" in the full Revolving Loan Credit Agreement (Exhibit 10.1) to understand the specific cash thresholds triggering early maturity.
- Confirm the current outstanding balance on the $900.0 million facility to assess immediate liquidity usage.
- Review the maturity dates of the senior secured term loan and senior exchange notes due 2015 to evaluate the potential impact of the new covenant.
- Assess the impact of the 100 basis point pricing grid increase and higher unused fees on future interest expense.