Business Context and Reporting Period
This Form 8-K Current Report was filed by Willis Towers Watson Public Limited Company on April 27, 2016. The filing details a material definitive agreement entered into by Willis Securities, Inc. (WSI), a wholly-owned indirect subsidiary and the U.S. operating company of Willis Capital Markets & Advisory.
Key Financial Metrics and Agreement Terms
The report concerns a $400 million revolving note facility (the "WSI Credit Facility") originally established in 2014. Key financial terms under the Third Amendment include:
- Facility Amount: $400 million.
- Interest Rates:
- Eurocurrency Rate Loans: LIBOR plus 1.250% to 2.00%.
- Base Rate Loans: Highest of (Federal Funds Rate + 0.50%, Prime Rate, or LIBOR + 1.00%), plus 0.250% to 1.00%.
- Commitment Fee: 0.150% to 0.300% on the unborrowed committed amount.
- Usage of Proceeds: Restricted to regulatory capital purposes related to securities underwriting to meet requirements of FINRA and other regulatory authorities.
Material Changes Versus Prior Period
The Third Amendment modifies the original credit agreement and prior amendments in the following ways:
- Extension of Credit Period: The end date of the Original Credit Period was extended from April 28, 2016, to April 28, 2017.
- Extension of Repayment Date: The Original Repayment Date was extended from April 28, 2017, to April 28, 2018.
- Pricing Modifications: Adjustments were made to the pricing structure based on WTW's guaranteed senior-unsecured long-term debt rating.
- Regulatory Provisions: Added technical provisions regarding the impact of European Union bail-in banking legislation on liabilities of non-U.S. financial institutions.
- Unchanged Terms: Prepayment provisions, affirmative covenants, and negative covenants remain unchanged.
Outlook, Risks, and Contingencies
The filing does not provide specific forward-looking guidance, management commentary on future performance, or general risk factors beyond the specific terms of the credit agreement. The agreement remains subject to conditions precedent, including the accuracy of representations and warranties and the absence of any default under the Credit Facility. The facility is structured to ensure compliance with subordination requirements of regulatory authorities to be included as regulatory capital.
Investor Verification Checklist
- Verify the current guaranteed senior-unsecured long-term debt rating of Willis Towers Watson to determine the specific interest rate and commitment fee applicable.
- Confirm the current outstanding principal balance under the $400 million WSI Credit Facility.
- Review the full text of the Third Amendment (Exhibit 10.1) for detailed definitions of the EU bail-in legislation provisions.
- Check for any subsequent defaults or changes in representations and warranties that could affect the availability of the facility.