Business Context and Reporting Period
Company: Willis Towers Watson Public Limited Company (WTW)
Filing Type: Form 8-K (Current Report)
Date of Report: March 7, 2017
Event: Entry into a Material Definitive Agreement regarding a new revolving credit facility.
Key Financial Metrics
- New Credit Facility: $1,250,000,000 revolving credit facility.
- Maturity Date: March 7, 2022.
- Debt Refinancing: $409,375,000 of proceeds used to retire all debt under the December 16, 2011 Credit Agreement.
- Interest Rates (Eurocurrency): LIBOR plus 1.00% to 1.75% (based on credit rating).
- Interest Rates (Base Rate): Highest of (i) Federal Funds Rate + 0.50%, (ii) Prime Rate, or (iii) LIBOR + 1.00%, plus 0.00% to 0.75% (based on credit rating).
- Fees: Commitment fee of 0.10% to 0.25% on unused amounts; Letter of credit fees of 1.00% to 1.75%.
- Security: Obligations are unsecured but guaranteed by WTW and certain subsidiaries.
Material Changes
The company replaced its existing credit agreement dated December 16, 2011, with a new Amended and Restated Credit Agreement. This action increases the total available credit capacity to $1.25 billion and extends the maturity date to 2022. The filing does not provide comparative financial performance data (revenue, profit, cash flow) as this is a transactional report rather than a periodic financial statement.
Guidance, Outlook, and Covenants
- Use of Proceeds: Remaining proceeds after refinancing are available for working capital, capital expenditures, permitted acquisitions, and other lawful corporate purposes.
- Covenants: The facility includes affirmative and negative covenants, including limitations on subsidiary indebtedness, liens, sale-leaseback transactions, investments, fundamental changes, asset sales, and restricted payments.
- Financial Covenants: The agreement requires the maintenance of certain financial covenants, though specific ratios are not detailed in this summary text.
- Prepayment: Voluntary prepayment is permitted without penalty for amounts greater than $5,000,000 or whole multiples of $1,000,000. Mandatory prepayment is required in certain circumstances.
- Events of Default: Include non-payment, covenant violations, incorrect representations, defaults under other material indebtedness, judgments, insolvency events, and specified ERISA events.
Investor Verification Checklist
- Verify the specific financial covenant ratios required under the new Credit Agreement (Exhibit 10.1).
- Confirm the current credit rating of WTW to determine the exact applicable interest rate margins and fees.
- Review the "Guaranty Agreement" (Exhibit 10.2) to identify which specific subsidiaries are providing guarantees.
- Assess the impact of the new facility on the company's overall leverage and liquidity position compared to the prior 2011 agreement.