Business Context and Reporting Period
Company: Genworth Financial, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: May 25, 2006
Event: Entry into a Material Definitive Agreement (Amended and Restated Five-Year Credit Agreement).
Key Financial Metrics and Debt Structure
- Facility Size: $1.0 billion revolving credit facility.
- Expansion Option: Commitments may be increased by up to $500 million subject to lender consent.
- Maturity Date: May 25, 2011 (extendable by one year twice, potentially to May 25, 2013).
- Outstanding Balance: $0 (as of May 25, 2006), excluding $1.1 million in letters of credit.
- Interest Rate: Variable based on Prime Rate or LIBOR plus a margin tied to credit ratings (Moody's/S&P).
- Fees: Facility fee on total commitments (used or unused) and an incremental utilization fee if borrowing exceeds 50% of commitments.
Material Changes Versus Prior Period
This agreement replaces a previous $1.0 billion 5-year senior credit facility that was scheduled to mature on April 30, 2009. The new agreement extends the maturity date to May 25, 2011, with potential extensions to 2013, and maintains the same aggregate principal amount with substantially the same parties.
Covenants, Risks, and Management Commentary
Financial Covenants
Genworth must maintain a consolidated net worth of at least $6.9 billion plus 40% of consolidated net income for each completed fiscal year ending after December 31, 2006.
Events of Default
- Failure to pay principal or interest.
- Breach of covenants or material incorrectness of representations.
- Bankruptcy or insolvency.
- Undischarged court judgments exceeding $100 million (not covered by insurance).
- Change of control (acquisition of >50% of common stock or majority of board seats by non-nominated persons).
Other Restrictions
The agreement limits the company's ability to create liens on assets, enter into mergers, sell substantially all assets, or engage in certain affiliate transactions.
Investor Verification Checklist
- Verify the current credit ratings assigned by Moody's and S&P to determine the applicable interest rate margin and facility fee.
- Confirm the company's consolidated net worth against the $6.9 billion threshold plus 40% of net income covenant.
- Review the full text of the Credit Agreement (Exhibit 10.1) for specific definitions of "consolidated net worth" and "consolidated net income."
- Monitor the status of the $1.1 million in outstanding letters of credit.