FIRST AMERICAN FINANCIAL CORPORATION (NYSE:FAF) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01Entry Into A Material Definitive Agreement.
The description contained in Item 2.03 below is hereby incorporated by reference herein.
Item 1.02Termination of a Material Definitive Agreement.
The description contained in Item 2.03 below is hereby incorporated by reference herein. For a description of the material terms of the Existing Credit Agreement (as defined below), please see First American Financial Corporations Current Report on Form 8-K as filed with the Commission on May 16, 2014, which description is incorporated herein by reference.
On April 30, 2019, First American Financial Corporation (the Company) entered into a senior unsecured credit agreement with JPMorgan Chase Bank, N.A. (JPMorgan) in its capacity as administrative agent and the lenders party thereto. The credit agreement is comprised of a $700.0 million revolving credit facility. The credit agreement includes an expansion option that permits the Company, subject to satisfaction of certain conditions, to increase the revolving commitments and/or add term loan tranches in an aggregate amount not to exceed $350.0 million. The obligations of the Company under the credit agreement are neither secured nor guaranteed. Upon entry into the credit agreement, the Company borrowed $160.0 million, which proceeds were used to repay in full the $160 million obligation outstanding under the Companys $700.0 million senior unsecured credit agreement dated as of May 14, 2014 with JPMorgan (the Existing Credit Agreement). Other proceeds from borrowings made from time to time under the credit agreement may be used for general corporate purposes. Unless terminated earlier, the credit agreement will terminate on April 30, 2024.
At the Companys election, borrowings of revolving loans under the credit agreement bear interest at (a) the Alternate Base Rate plus the applicable spread or (b) the Adjusted LIBO Rate plus the applicable spread (in each case as defined in the credit agreement). The Company may select interest periods of one, two, three or six months or (if agreed to by all lenders) such other number of months for Eurodollar borrowings of loans. The applicable spread varies depending upon the Debt Rating assigned by Moodys, SP and/or Fitch. The minimum applicable spread for Alternate Base Rate borrowings is 0.25 percent and the maximum is 1.00 percent. The minimum applicable spread for Adjusted LIBO Rate borrowings is 1.25 percent and the maximum is 2.00 percent. The rate of interest on any term loans incurred in connection with the expansion option will be established at or about the time such loans are made and may differ from the rate of interest on revolving loans.
The credit agreement includes representations and warranties, reporting covenants, affirmative covenants, negative covenants, financial covenants and events of default customary for financings of this type. Upon the occurrence of an event of default the lenders may accelerate the loans. Upon the occurrence of certain insolvency and bankruptcy events of default the loans will automatically accelerate.
The financial institutions party to the credit agreement and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage, and other financial and non-financial activities and services. Certain of these financial institutions and their respective affiliates were party to the Existing Credit Agreement and/or have provided, and may in the future provide, a variety of these services to the Company and to persons and entities with relationships with the Company, for which they received or will receive customary fees and expenses.
The credit agreement replaces the Existing Credit Agreement, which was terminated on April 30, 2019 in connection with the Company entering into the credit agreement.
About FIRST AMERICAN FINANCIAL CORPORATION (NYSE:FAF)
First American Financial Corporation is a holding company. Through its subsidiaries, the Company is engaged in the business of providing financial services. The Company’s segments include Title Insurance and Services, Specialty Insurance and corporate function. The Company’s title insurance and services segment issues title insurance policies on residential and commercial property in the United States and offers similar or related products and services internationally. The Company’s specialty insurance segment issues property and casualty insurance policies and sells home warranty products. Its corporate function consists primarily of certain financing facilities, as well as the corporate services that support the Company’s business operations. The Company’s subsidiary is First American Title Insurance Company (FATICO) and the Company’s federal savings bank subsidiary is First American Trust, FSB.
