Raymond James Financial, Inc. (NYSE:RJF) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement
On February 19, 2019, Raymond James Financial, Inc. (“RJF”) and Raymond James & Associates, Inc. (“RJA”, and together with RJF, the “Companies”) entered into an unsecured $500 million revolving credit agreement (the “Credit Agreement”) with a syndicate of lenders led by Bank of America, Citibank, JPMorgan Chase Bank and Regions Bank.
The Credit Agreement replaces the previous unsecured $300 million revolving credit agreement entered into by RJF with a syndicate of lenders led by Bank of America and Regions Bank on August 6, 2015.
Amounts borrowed under the Credit Agreement are repayable at maturity on February 19, 2024. The proceeds of loans under the Credit Agreement are to be used by RJF to finance working capital and other corporate purposes and by RJA for short-term operating needs. Under certain conditions, the Companies may elect to increase the aggregate principal amount of commitments under the Credit Agreement to a maximum amount of $750 million with a sub-limit on borrowings by RJF not to exceed $300 million. None of the lenders under the Credit Agreement are obligated to provide such additional commitments to the Companies.
Borrowings under the Credit Agreement will bear interest at (i) LIBOR for specified interest periods or (ii) a floating base rate (based upon the highest of (a) Bank of America, N.A.’s prime rate, (b) the Federal Funds rate plus 0.50% and (c) LIBOR for an interest period of one month plus 1.00%), plus, in either case, an applicable margin determined with reference to the non-credit-enhanced, senior unsecured long-term debt ratings of RJF. Based on the current debt rating of RJF, the applicable margin for LIBOR-based loans would be 1.325% and for base rate loans would be 0.325%. In addition, the Companies are required to pay the lenders a facility fee on the aggregate revolving commitments of the lenders (or the outstanding amount of loans, as applicable) at a rate per annum which is based on the debt ratings of RJF. Based on the current debt rating of RJF, the facility fee would be 0.175%.
The Credit Agreement contains customary restrictive covenants on the Companies and their subsidiaries. Restrictive covenants in the Credit Agreement include prohibitions on the following: creating, incurring, assuming or suffering to exist liens; making investments; incurring additional subsidiary debt; entering into mergers, dissolutions, liquidations and consolidations; dispositions of assets; restricted payments; change in nature of the business; transactions with affiliates; burdensome agreements; use of proceeds; sanctions; and anti-corruption laws. Many of these restrictions are subject, however, to materiality thresholds and other exceptions.
The Credit Agreement also includes the following financial covenants applicable to RJF: (i) the ratio of consolidated funded debt of RJF and its subsidiaries to consolidated total capitalization of RJF and its subsidiaries not to be greater than 0.35 to 1.00; (ii) consolidated tangible net worth of RJF and its subsidiaries not to be less than the sum of $4,133,000,000 plus 50% of net cash proceeds from the issuance of equity interests plus 50% of consolidated net income of RJF and its subsidiaries, if positive; and (iii) RJF shall not permit RJA to allow its month-end net capital ratio of to be less than 10%; and the Credit Agreement includes the following financial covenants applicable to RJA: (i) the month-end net capital ratio of RJA not to be less than 10% and (ii) consolidated tangible net worth of RJA and its subsidiaries not to be less than the sum of $1,687,000,000.
The Credit Agreement contains customary provisions regarding events of default which could result in acceleration, increase in amounts due or other remedies. Such events of default include the following: non-payment; failure to comply with covenants; material inaccuracy of representations and warranties; cross-default to other debt; bankruptcy or insolvency proceedings; judgments; ERISA matters; invalidity of loan documents; and change of control. Many of these events of default are subject, however, to materiality thresholds, grace periods and other exceptions.
The lenders (and their respective affiliates) may have provided, and may in the future provide, investment banking, cash management, underwriting, lending, commercial banking, leasing, foreign exchange, trust or other advisory
services to the Companies and their subsidiaries and affiliates. These parties may have received, and may in the future receive, customary compensation for these services.
The foregoing description of the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the Credit Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K. The Credit Agreement is being filed in order to provide investors with information regarding its terms. Except for its status as a contractual document that establishes and governs the legal relations among the parties thereto with respect to the transactions described in this Current Report on Form 8-K, the Credit Agreement is not intended to be a source of factual, business or operational information about the parties. Investors are not third-party beneficiaries under the Credit Agreement and should not rely on the representations, warranties and covenants, or any descriptions thereof, as characterizations of the actual state of facts or condition of the parties or any of their affiliate.
RJF issued a press release announcing entry into the Credit Agreement on February 20, 2019, which is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits. The following are filed as exhibits to this report:
Exhibit No.
RAYMOND JAMES FINANCIAL INC Exhibit
EX-10.1 2 ex101creditagreementraym.htm EXHIBIT 10.1 CREDIT AGREEMENT ex101creditagreementraym EXECUTION VERSION Published CUSIP Numbers: Deal: 75473EAG4 Revolver: 75473EAH2 CREDIT AGREEMENT Dated as of February 19,…
To view the full exhibit click here
About Raymond James Financial, Inc. (NYSE:RJF)
Raymond James Financial, Inc. (RJF) is a financial holding company. The Company’s subsidiaries include Raymond James & Associates, Inc. (RJ&A), Raymond James Financial Services, Inc. (RJFS), Raymond James Financial Services Advisors, Inc. (RJFSA), Raymond James Ltd. (RJ Ltd.), Eagle Asset Management, Inc. (Eagle), and Raymond James Bank, N.A. (RJ Bank). It operates through five segments: Private Client Group (PCG), Capital Markets, Asset Management, RJ Bank and the Other segment. The Private Client Group segment includes the retail branches of the Company’s broker-dealer subsidiaries located throughout the United States, Canada and the United Kingdom. The Capital Markets segment includes institutional sales and trading in the United States, Canada and Europe. The Asset Management segment includes the operations of Eagle, the Eagle Family of Funds and other fee-based asset management programs. RJ Bank segment provides corporate loan, securities based loans (SB) and residential loans.