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JPMorgan Agents H&R Block’s New $2B Credit Facility

September 22, 2015, 07:39 AM
Filed Under: Specialty Industries

H&R Block, Inc. announced its wholly owned subsidiary, Block Financial LLC, entered into a new five-year, $2.0 billion Credit and Guarantee Agreement. JPMorgan Chase Bank, N.A. acted as the administrative agent, and Bank of America, N.A., SunTrust Bank, TD Bank, N.A., and U.S. Bank National Association acted as co-syndication agents for the Agreement.

"I'm very pleased to have finalized this new long-term Agreement, which provides us financial flexibility for the foreseeable future," said Greg Macfarlane, H&R Block's chief financial officer. "By upsizing our facility and modifying our financial covenants, we have taken an important step in achieving the capital structure strategy we outlined earlier this month."

The execution of this Agreement satisfies a condition of the company's previously announced tender offer to purchase up to $1.5 billion of its common stock. The tender offer, however, remains subject to the other conditions described in the Offer to Purchase, dated September 2, 2015. The tender offer will expire at 5:00 P.M., New York City time, on Friday, October 2, 2015, unless the company extends the tender offer.

The Agreement matures on September 21, 2020, unless extended pursuant to the terms of the Agreement, and contains customary representations, warranties, covenants, and events of default. The Agreement also contains financial covenants consisting of: (1) a covenant requiring the company to maintain a debt-to-EBITDA ratio calculated on a consolidated basis of no greater than 3.5 to 1.0 as of the last day of each fiscal quarter ending on April 30, July 31 and October 31 of each year and 4.5 to 1.0 as of the last day of the fiscal quarter ending on January 31 of each year; and (2) a covenant requiring the company to maintain an interest coverage (EBITDA-to-interest expense) ratio calculated on a consolidated basis of not less than 2.5 to 1.0 as of the last day of any fiscal quarter. The company intends to borrow amounts under the new credit facility from time to time in the future, rather than issuing commercial paper, to support the company's working capital needs or for other general corporate purposes.

H&R Block, Inc. is the world's largest consumer tax services provider. More than 680 million tax returns have been prepared worldwide by and through H&R Block since 1955. In fiscal 2015, H&R Block had annual revenues of nearly $3.1 billion with 24.2 million tax returns prepared worldwide.

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