Business Context and Reporting Period
Company: Deluxe Corporation
Filing Type: Form 8-K (Current Report)
Date of Report: March 12, 2010
Event: Creation of a direct financial obligation via a new secured revolving credit facility.
Key Financial Metrics
| Metric | Value |
|---|---|
| Total Credit Facility Amount | $200 million |
| Outstanding Borrowings (as of March 12, 2010) | $14.5 million |
| Net Available Borrowings | Approximately $176 million |
| Swing Line Loans Capacity | Up to $15 million |
| Letters of Credit Capacity | Up to $20 million |
| Interest Rate (LIBOR-based) | Adjusted LIBOR + 2.50% to 3.25% |
| Interest Rate (Base/Prime-based) | Adjusted Base/Prime + 1.50% to 2.25% |
| Maturity Date | March 12, 2013 |
Material Changes
- New Facility: Entered into a three-year revolving credit facility with JPMorgan Chase Bank, N.A., and other lenders.
- Termination of Prior Facility: A previous credit facility was terminated contemporaneously with the execution of the new agreement.
- Collateral: The Company and domestic material subsidiaries granted a security interest in substantially all personal property to secure obligations.
- Guarantees: Obligations are guaranteed by certain material subsidiaries, with potential for additional subsidiaries to become guarantors.
Guidance, Covenants, and Risks
Financial Covenants: The facility requires maintenance of specific ratios, including a maximum Leverage Ratio, a minimum Consolidated EBIT to Consolidated Interest Expense ratio, and minimum Liquidity (applicable after June 30, 2012).
Cross-Default Provisions: Failure to pay principal or interest on other indebtedness exceeding $15 million, or a breach allowing acceleration of at least that amount, will trigger a default under this facility.
Restrictive Covenants: The agreement limits indebtedness, liens, investments, acquisitions (excluding capital expenditures), mergers, and asset sales outside the ordinary course of business. It also includes a "Change in Control" event of default.
Unusual Items: The filing does not disclose unusual items or specific management guidance regarding future earnings; the focus is strictly on the financing arrangement.
Investor Verification Checklist
- Verify the current Leverage Ratio to ensure compliance with the maximum threshold defined in the Credit Facility.
- Confirm the status of the terminated prior credit facility and any remaining obligations.
- Review the specific definition of "Liquidity" required after June 30, 2012, to assess future covenant headroom.
- Examine the list of subsidiaries providing guarantees and the scope of assets pledged as collateral.
- Monitor the Company's other indebtedness to ensure no cross-default triggers are activated.