Business Context and Reporting Period
This Form 8-K Current Report was filed by The Western Union Company on September 23, 2011. The filing discloses 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 and a swing line subfacility up to $150 million.
- Interest Rate: Generally calculated as a selected LIBOR rate plus a margin of 90 basis points.
- Facility Fee: Payable quarterly on the total facility amount regardless of usage.
- Maturity Date: January 2, 2017 (subject to extension).
- Administrative Agent: Wells Fargo Bank, National Association.
The filing 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
On September 23, 2011, Western Union terminated its Prior Credit Agreement (dated September 28, 2007) and replaced it with the New Credit Agreement. The new agreement maintains the aggregate financing capacity of $1.65 billion but updates the syndicate of lenders and terms.
Management Commentary, Covenants, and Risks
The New Credit Agreement includes customary representations and covenants that restrict the company's financial flexibility in specific areas:
- Restrictions: Limits on selling or transferring assets, entering into mergers or consolidations, granting security interests, incurring liens, and subsidiary-level indebtedness.
- Financial Covenant: The company is required to maintain compliance with a consolidated interest coverage ratio.
- Variable Terms: Interest rate margins and facility fee percentages 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 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.
- Assess the impact of the new covenants on potential future asset sales or merger activities.