Automatic Data closes $6.5 billion 364-day, five-year facilities

By Wendy Van Sickle

Columbus, Ohio, June 30 – Automatic Data Processing, Inc. entered into a $4.25 billion 364-day credit agreement and a $2.25 billion five-year credit agreement on Friday with JPMorgan Chase Bank, NA as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

The five-year facility contains a $500 million accordion feature.

The 364-day facility replaced the company’s prior $3.75 billion 364-day facility, entered into on July 1, 2022, and the five-year facility replaced the company’s prior $2.75 billion five-year facility, entered into on June 12, 2019, both of which were terminated on Friday.

The existing $3.2 billion five-year credit agreement entered into on June 9, 2021 will continue but was amended to use SOFR to replace Libor as the interest rate benchmark. This credit facility will mature on June 9, 2026.

Two borrowing options will be available under the new facilities: a competitive advance option and a revolving credit option. The competitive advance option will be provided on an uncommitted competitive advance basis through an auction mechanism. The revolving credit will be provided on a committed basis.

Commitments under the 364-day facility will expire on June 28, 2024, and commitments under the five-year facility will expire on June 30, 2028.

The company may, from time to time and by written notice given not fewer than 30 days and not more than 120 days prior to any anniversary of the closing date, request that the lenders extend the commitments under the five-year facility for an additional period of one year.

Under each facility, interest under a competitive advance option will be payable at the rates obtained from bids selected by the company in accordance with the competitive auction procedures set forth in each facility.

In addition, the company will pay a commitment fee on unused commitments. In the case of the 364-day facility, the fee is 1.75 bps, and in the case of the five-year facility, the fee will range from 4 bps to 10 bps, depending on the company’s rating.

Also, the company will pay a term-out fee of 0.75% of the amount of any loans outstanding under the 364-day facility after June 28, 2024.

The facilities are led by J.P. Morgan Chase Bank, BofA Securities, Inc., BNP Paribas Securities Corp., Wells Fargo Securities, LLC and Deutsche Bank Securities Inc. as joint lead arrangers and joint bookrunners. Barclays Bank plc is documentation agent for each of the facilities.

Bank of America, NA, BNP Paribas, Wells Fargo Bank, NA and Deutsche Bank are syndication agents.

Automatic Data provides business outsourcing and computing services to automobile and heavy equipment dealers. It is based in Roseland, N.J.

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