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| Eliot Spitzer |
As first reported on LMW's Web site, Marsh & McLennan Companies (MMC) is lining up immediate discussions with its lenders to amend or replace its $2.755 billion credit facilities as Eliot Spitzer continues his assault on the company over brokerage fees. According to a Securities and Exchange Commission filing, the matters raised by the civil complaint may prohibit MMC from borrowing under the facilities, which contain standard representations as to no material adverse litigation and compliance with laws. "It's important to monitor," said Peter Patrino, a Fitch Ratings analyst covering MMC. They have until the end of the year to continue to use the bank lines, he said, adding that without these lines as support, they would not be able to use commercial paper. Fitch would look at this very unfavorably, he noted, adding, "if they have a large amount of commercial paper outstanding and it is rolling over, then if the [bank lines] are not there, then they are in a liquidity crunch."
The required lenders under the facilities have agreed to waive this until Dec. 30, and in exchange MMC has agreed that the facilities will be used exclusively to support CP borrowings. In order for MMC to borrow under the facilities, the face amount of CP outstanding cannot exceed $1.9 billion. MMC has also agreed not to repurchase its stock and not to permit any of its subsidiaries to incur debt other than under existing facilities.
MMC maintains four revolving facilities. A $700 million facility that expires in June 2005; a $355 million revolver that expires in July 2005; a $1 billion revolver expiring in June 2007; and a $700 million expiring in June 2009. The facilities support MMC's CP program and are currently undrawn. Lead agents on the facilities include Bank of America, Citigroup and J.P. Morgan. Bankers and spokespeople for the firms either declined to comment or did not return calls. An MMC spokeswoman also did not return calls.