Business Context and Reporting Period
This Form 8-K Current Report, dated September 29, 2015, concerns The Western Union Company. The filing reports the entry into a new material definitive credit agreement and the simultaneous termination of a prior credit agreement.
Key Financial Metrics and Debt Structure
The filing details a new unsecured financing facility with the following characteristics:
- Total Facility Amount: $1.65 billion.
- Structure: Revolving credit facility including a $250 million letter of credit subfacility.
- Interest Rate: Generally calculated as a selected LIBOR rate plus a margin of 110 basis points.
- Facility Fee: Payable quarterly on the total facility amount regardless of usage.
- Maturity Date: September 29, 2020 (subject to extension).
- Administrative Agent: Citibank, N.A.
The filing text does not provide specific values for revenue, profit, cash flow, margins, or current liquidity positions outside of the new credit facility terms.
Material Changes Versus Prior Period
Western Union terminated its Prior Credit Agreement, dated September 23, 2011, effective September 29, 2015. This prior agreement was replaced in its entirety by the New Credit Agreement described above. The new agreement introduces updated covenants and interest rate structures compared to the terminated facility.
Management Commentary, Covenants, and Risks
The New Credit Agreement includes customary representations and covenants that impose specific restrictions on the company's operations:
- Restrictive Covenants: Limits on selling or transferring assets, entering into mergers or consolidations, granting security interests, incurring liens, imposing restrictions on subsidiary dividends, entering into sale and leaseback transactions, and incurring certain subsidiary-level indebtedness.
- Financial Covenant: Western Union is required to maintain compliance with a consolidated interest coverage ratio.
- Variable Terms: The interest rate margin and facility fee percentage may vary based on changes in Western Union's credit ratings.
Key Facts for Investor Verification
- Verify the current utilization of the $1.65 billion revolving credit facility.
- Confirm Western Union's current credit rating to determine the applicable interest rate margin and facility fee.
- Review the company's consolidated interest coverage ratio to ensure compliance with the new covenant.
- Examine the full text of the Credit Agreement (Exhibit 10.1) for specific exceptions to the restrictive covenants.