UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
Date of report (Date of
earliest event reported):
August 13,
2010
Aon Corporation
(Exact Name of Registrant as
Specified in Charter)
Delaware
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1-7933
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36-3051915
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(State or Other
Jurisdiction
of Incorporation)
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(Commission File Number)
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(IRS Employer
Identification No.)
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200 East
Randolph Street, Chicago, Illinois
(Address of Principal
Executive Offices)
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60601
(Zip Code)
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Registrants telephone
number, including area code:
(312) 381-1000
Not
Applicable
(Former Name or Former
Address, if Changed Since Last Report)
Check the appropriate box below if
the Form 8-K filing is intended to simultaneously satisfy the filing
obligation of the registrant under any of the following provisions (
see
General Instruction A.2. below):
x
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
o
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Item 1.01.
Entry into a Material Definitive Agreement.
Term Loan Agreement and Bridge
Credit Agreement
On August 13, 2010, Aon
Corporation, a Delaware corporation (Aon), entered into a Three-Year Term
Credit Agreement (the Term Loan Agreement) with Credit Suisse AG (CS AG),
as administrative agent, the lenders party thereto (collectively, the Term
Loan Lenders), Morgan Stanley Senior Funding, Inc., as syndication agent
(Morgan Stanley), Bank of America, N.A. (Bank of America), Deutsche Bank
Securities Inc. (Deutsche Bank) and RBS Securities Inc. (RBS), as
co-documentation agents, Credit Suisse Securities (USA) LLC (CS USA) and
Morgan Stanley, as joint lead arrangers and joint bookrunners, and Bank of
America, Deutsche Bank and RBS as co-arrangers, pursuant to which, subject to
the conditions set forth in the Term Loan Agreement, the Term Loan Lenders
committed to provide an unsecured term loan financing of up to $1.0 billion
(the Term Loan Facility). Concurrently
with entering into the Term Loan Agreement, Aon entered into a Senior Bridge
Term Loan Credit Agreement (the Bridge Credit Agreement and, together with
the Term Loan Agreement, the Credit Agreements) with CS AG, as administrative
agent, the lenders party thereto (collectively, the Bridge Lenders), Morgan
Stanley, as syndication agent, Bank of America, Deutsche Bank and RBS, as
co-documentation agents, CS USA and Morgan Stanley, as joint lead arrangers and
joint bookrunners, and Bank of America, Deutsche Bank and RBS as co-arrangers,
pursuant to which, subject to the conditions set forth in the Bridge Credit
Agreement, the Bridge Lenders committed to provide an unsecured bridge
financing of up to $1.5 billion (the Bridge Facility and, together with
the Term Loan Facility, the Facilities).
The Term Loan Agreement and Bridge Credit Agreement contain the
negotiated terms and conditions originally contemplated in the Debt Commitment
Letter
, dated as of July 11,
2010, among Aon, CS USA, CS AG and Morgan Stanley, which was filed as Exhibit 10.1
to the Current Report on Form 8-K, dated as of July 11, 2010 and
filed by Aon on July 12, 2010.
Aon has the option to issue up to
$1.5 billion in senior notes in lieu of all or a portion of the drawing
under the Bridge Facility or to refinance all or a portion of the Bridge
Facility at a later date. Aon currently expects to issue senior notes in lieu
of drawing on the Bridge Facility. The
proceeds from these borrowings or issuances will be used by Aon to pay all or a
portion of the cash consideration to be paid in the merger (the Merger) of
Hewitt Associates, Inc., a Delaware corporation (Hewitt), with and into
Alps Merger Corp., a Delaware corporation and wholly owned subsidiary of Aon (Merger
Sub) pursuant to the Agreement and Plan of Merger, dated as of July 11,
2010, among Aon, Merger Sub, Alps Merger LLC, a Delaware limited liability
company and wholly owned subsidiary of Aon, and Hewitt (the Merger Agreement),
to refinance existing indebtedness of Hewitt and its subsidiaries and to pay
related fees and expenses. The Credit Agreements provide, among other things,
that the closings of the Term Loan Facility and the Bridge Facility are subject
to certain conditions.
Facilities
The Term Loan Facility will
mature three years following the closing date of the Merger and the Bridge
Facility will mature 364 days following the closing date of the Merger.
The Facilities will rank senior to or pari passu with all existing and future
unsecured indebtedness of Aon.
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The unused commitments under
the Credit Agreements will terminate upon the first to occur of
(i) 5:00 p.m., New York City time on March 31, 2011 or
(ii) the abandonment or termination of the Merger Agreement or the public
announcement by either Aon or Hewitt of its intention not to proceed with the
Merger.
Interest
Rate
Borrowings under the
Facilities will bear interest, at Aons option, at a rate equal to either
(a) the rate for eurodollar deposits as reflected on the applicable
Reuters Screen LIBOR01 for the interest period relevant to such borrowing
(adjusted for any statutory reserve requirements for eurocurrency liabilities)
(the Eurodollar Rate), plus the applicable margin or (b) the highest of
(i) the rate of interest publicly announced by CS AG as its prime rate,
(ii) the federal funds effective rate from time to time plus 0.5% and
(iii) the one month Eurodollar Rate plus 1.0%, plus the applicable margin.
The Eurodollar Rate for borrowings under the Bridge Facility will be subject to
a floor of 1.00%. The applicable margin for borrowings under the Facilities may
change depending on Aons achievement of certain ratings, and, from the 90
th
day after the closing date of the Merger, the applicable
margin for borrowings under the Bridge Facility will also be determined with
reference to a credit default swap spread.
Prepayments
and Redemptions
Subject to certain
exceptions, the commitments in respect of the Bridge Facility under the Bridge Credit
Agreement will be permanently reduced, and after the closing date, the
outstanding loans under the Bridge Facility will be prepaid:
·
with
the net cash proceeds of the sale or other disposition of any property or
assets outside the ordinary course of business (including, without limitation,
insurance and condemnation proceeds) (subject to certain exceptions);
·
with
the net cash proceeds of issuances of equity interests (subject to certain
exceptions); and
·
with
the net cash proceeds received from the incurrence of certain indebtedness for
borrowed money (subject to certain exceptions).
Prior to the closing date of
the Merger, commitments under the Facilities may be reduced in whole or in part
at the election of Aon without premium or penalty. Following the closing date
of the Merger, the Facilities may be prepaid in whole or in part at the
election of Aon without premium or penalty; provided that loans bearing
interest with reference to the Eurodollar Rate will be prepayable only on the
last day of the related interest period unless Aon pays any related breakage
costs.
Conditions
Precedent
The Credit Agreements include
customary conditions to funding, including, among others, the absence of a material
adverse effect on Aon or Hewitt, in each case, consistent with the equivalent
definition in the Merger Agreement, consummation of the Merger and the absence
of any amendment or modification to the Merger Agreement materially adverse to
CS USA or
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Morgan Stanley (collectively, the Arrangers)
of the Facilities, the lenders thereunder or Aon unless approved by the
Arrangers, the delivery of financial information and other customary closing
deliveries, including delivery by the chief financial officer of Aon of a
solvency certificate in form and substance reasonably satisfactory to the
Arrangers (or, at Aons option, a solvency opinion from an independent
investment bank or valuation firm of nationally recognized standing, such
opinion to be in form and substance reasonably satisfactory to the Arrangers),
the receipt of minimum debt ratings of BBB- (with no negative outlook) from
S&P and Baa3 (with no negative outlook) from Moodys, repayment of certain
Hewitt indebtedness and a pro forma ratio of total indebtedness to EBITDA of
not in excess of 3.0 to 1.0 (giving effect to the Merger on a pro forma basis).
Covenants
and Events of Default
The Facilities contain a
number of covenants, including limitations on the following (subject in each
case to materiality thresholds and certain other exceptions):
·
subsidiary
indebtedness, guarantees and hedging agreements;
·
liens;
·
dividends
and share redemptions and repurchases;
·
inconsistent
agreements;
·
asset
sales;
·
mergers
and consolidations;
·
ERISA;
·
changes
in fiscal year; and
·
transactions
with affiliates.
In addition, the Bridge
Facility includes a limitation on acquisitions and investments, subject to
certain exceptions, and a limitation on restricted payments that is more
restrictive than the corresponding covenant in the Term Loan Facility, subject
to certain exceptions.
Each Facility also includes a
maximum consolidated leverage ratio of not more than 3.0 to 1.0 and minimum
interest coverage ratio of not less than 4.0 to 1.0 (with add-backs permitted
to consolidated EBITDA for fees and expenses and other one-time charges related
to the merger, subject to certain caps).
The Facilities also contain
certain customary events of default, including relating to non-payment, breach
of covenants, cross-default to the other facility, cross-acceleration,
bankruptcy and change of control.
The foregoing summaries of the Term
Loan Agreement and Bridge Credit Agreement do not purport to be complete
descriptions and are qualified in their entirety by reference to the
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terms and conditions of the Term
Loan Agreement and Bridge Credit Agreement, copies of which are attached as Exhibit 10.1
and 10.2 and incorporated herein by reference.
Amendment to Existing Domestic
Credit Agreement
On August 13, 2010, Aon,
Citibank, N.A., as administrative agent (Citibank), and the lenders party
thereto entered into Amendment No. 1 (the Amendment) to the $400,000,000
Three-Year Credit Agreement, dated as of December 4, 2009, among Aon,
Citibank, JP Morgan Chase Bank, N.A., as syndication agent, and the lenders
party thereto (the Existing Domestic Credit Agreement).
The Amendment modifies certain
provisions of the Existing Domestic Credit Agreement for consistency with the
Term Loan Agreement and the Bridge Credit Agreement and to accommodate the Term
Loan Facility, the Bridge Facility (and any issuance of senior notes in lieu of
all or a portion of the Bridge Facility), the Merger and the transactions
contemplated thereby. Such modifications
include permitting add-backs to consolidated EBITDA for fees and expenses and
other one-time charges related to the Merger (subject to certain caps),
permitting restrictions set forth in existing Hewitt indebtedness for a
specified period of time, modifying the maximum consolidated leverage ratio to
adjust for the effects of any senior note issuance prior to consummation of the
Merger, as well as certain other conforming changes and updates.
The foregoing summary of the
Amendment does not purport to be a complete description and is qualified in its
entirety by reference to the terms and conditions of the Amendment, a copy of
which is attached as Exhibit 10.3 and incorporated herein by reference.
Item 2.03.
Creation of a Direct Financial Obligation or
an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth above in
Item 1.01 of this Current Report on Form 8-K is incorporated herein by
reference.
Safe
Harbor Statement
This communication contains certain
statements related to future results, or states our intentions, beliefs and
expectations or predictions for the future which are forward-looking statements
as that term is defined in the Private Securities Litigation Reform Act of
1995. These forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from either
historical or anticipated results depending on a variety of factors. Potential
factors that could impact results include: the possibility that the expected
efficiencies and cost savings from the proposed transaction will not be
realized, or will not be realized within the expected time period; the ability
to obtain governmental approvals of the merger on the proposed terms and
schedule contemplated by the parties; the failure of stockholders of Hewitt to
approve the proposal to adopt the merger agreement; the failure of the
stockholders of Aon to approve the proposal to approve the issuance of shares
of Aon common stock to Hewitt stockholders in the merger; the loss of key Aon
or Hewitt employees following the merger; the risk that the Aon and Hewitt
businesses will not be integrated successfully; disruption from the proposed
transaction making it more difficult to maintain business and operational
relationships with customers, partners and others; the possibility that the
proposed
5
transaction does not close,
including, but not limited to, due to the failure to satisfy the closing
conditions; general economic conditions in different countries in which Aon and
Hewitt do business around the world; changes in global equity and fixed income
markets that could affect the return on invested assets; fluctuations in
exchange and interest rates that could impact revenue and expense; rating
agency actions that could affect Aons ability to borrow funds; changes in the
funding status of Aons various defined benefit pension plans and the impact of
any increased pension funding resulting from those changes; Aons ability to
implement restructuring initiatives and other initiatives intended to yield
cost savings, and the ability to achieve those cost savings; the impact on risk
and insurance services commission revenues of changes in the availability of,
and the premium insurance carriers charge for, insurance and reinsurance
products, including the impact on premium rates and market capacity
attributable to catastrophic events; the outcome of inquiries from regulators
and investigations related to compliance with the U.S. Foreign Corrupt
Practices Act and non-U.S. anti-corruption laws; the impact of investigations
brought by U.S. state attorneys general, U.S. state insurance regulators, U.S.
federal prosecutors, U.S. federal regulators, and regulatory authorities in the
U.K. and other countries; the impact of class actions and individual lawsuits
including client class actions, securities class actions, derivative actions
and ERISA class actions; the cost of resolution of other contingent liabilities
and loss contingencies, including potential liabilities arising from error and
omissions claims against Aon or Hewitt; the extent to which Aon and Hewitt
retain existing clients and attract new businesses; the extent to which Aon and
Hewitt manage certain risks created in connection with the various services,
including fiduciary and advisory services, among others, that Aon and Hewitt
currently provide, or will provide in the future, to clients; the impact of,
and potential challenges in complying with, legislation and regulation in the
jurisdictions in which Aon and Hewitt operate, particularly given the global
scope of Aons and Hewitts businesses and the possibility of conflicting
regulatory requirements across jurisdictions in which Aon and Hewitt do
business; and the ability to realize the anticipated benefits to Aon of the
Benfield merger. Further information concerning Aon, Hewitt, and their
business, including factors that potentially could materially affect Aons and
Hewitts financial results, is contained in Aons and Hewitts filings with the
Securities and Exchange Commission (the SEC). See Aons and Hewitts
Annual Reports on Form 10-K and Annual Reports to Stockholders for the
fiscal years ended December 31, 2009 and September 30, 2009,
respectively, and other public filings with the SEC for a further discussion of
these and other risks and uncertainties applicable to our businesses. Neither
Aon nor Hewitt undertakes, and each of them expressly disclaims, any duty to
update any forward-looking statement whether as a result of new information,
future events or changes in their respective expectations, except as required
by law.
Additional
Information
This communication does not
constitute an offer to sell or the solicitation of an offer to buy our
securities or the solicitation of any vote or approval. This
communication is being made in respect of the proposed transaction involving
Aon and Hewitt. In connection with the proposed merger, Aon filed with
the SEC a registration statement on Form S-4 that included a preliminary joint
proxy statement of Aon and Hewitt that also constitutes a preliminary
prospectus of Aon, and each of the companies may be filing with the SEC other
documents regarding the proposed transaction. At the appropriate time, Aon and
Hewitt will mail the definitive joint proxy statement/prospectus regarding the
proposed merger to their respective
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stockholders. Before making any
voting or investment decision, investors and stockholders are urged to read
carefully in their entirety the definitive joint proxy statement/prospectus
regarding the proposed transaction and any other relevant documents filed by
either Aon or Hewitt with the SEC when they become available because they will
contain important information about the proposed transaction. You may
obtain copies of all documents filed with the SEC regarding this transaction,
free of charge, at the SECs website (www.sec.gov), by accessing Aons website
at www.aon.com under the heading Investor Relations and then under the link SEC
Filings and from Aon by directing a request to Aon at Aon Corporation, 200 E.
Randolph Street, Chicago, Illinois 60601, Attention: Investor Relations,
and by accessing Hewitts website at www.hewitt.com under the heading Investor
Relations and then under the link Reports & SEC Filings and from
Hewitt by directing a request to Hewitt at Hewitt Associates, Inc., 100
Half Day Road, Lincolnshire, Illinois 60069, Attention: Investor
Relations.
Aon and Hewitt and their respective
directors and executive officers and certain other members of management and
employees may be deemed to be participants in the solicitation of proxies in
respect of the proposed transaction. You can find information about Aons
directors and executive officers in its definitive proxy statement filed with
the SEC on April 7, 2010. You can find information about Hewitts
directors and executive officers in its definitive proxy statement filed with
the SEC on December 16, 2009. Other information regarding the participants
in the proxy solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in the joint
proxy statement/prospectus and other relevant materials to be filed with the
SEC when they become available. You can obtain free copies of these documents
from Aon and Hewitt using the contact information above.
Item 9.01.
Financial Statements and Exhibits.
(a)-(c)
Not
applicable.
(d)
Exhibits:
10.1
Three-Year
Term Credit Agreement, dated as of August 13, 2010, among Aon Corporation,
Credit Suisse AG, as administrative agent, the lenders party thereto, Morgan
Stanley Senior Funding, Inc., as syndication agent, Bank of America, N.A.,
Deutsche Bank Securities Inc. and RBS Securities Inc., as co-documentation
agents, Credit Suisse Securities (USA) LLC
and Morgan Stanley Senior Funding, Inc., as joint lead arrangers
and joint bookrunners, and Bank of America, N.A., Deutsche Bank Securities Inc.
and RBS Securities Inc. as co-arrangers
10.2
Senior
Bridge Term Loan Credit Agreement, dated as of August 13, 2010, among Aon
Corporation, Credit Suisse AG, as administrative agent, the lenders party
thereto, Morgan Stanley Senior Funding, Inc., as syndication agent, Bank
of America, N.A., Deutsche Bank Securities Inc. and RBS Securities Inc., as
co-documentation agents, Credit Suisse Securities (USA) LLC and Morgan Stanley Senior Funding, Inc.,
as joint lead arrangers and joint bookrunners, and Bank of America, N.A.,
Deutsche Bank Securities Inc. and RBS Securities Inc. as co-arrangers
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10.3
Amendment
No. 1 to the Credit Agreement, dated as of December 4, 2009, among
Aon, Citibank, N.A., as administrative agent, JP Morgan Chase Bank, N.A., as
syndication agent, and the lenders party thereto, among Aon Corporation,
Citibank, N.A., as administrative agent, and the lenders party thereto, dated
as of August 13, 2010
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SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly authorized.
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Aon CORPORATION
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By:
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/s/
Jennifer L. Kraft
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Jennifer L. Kraft
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Vice President
and Secretary
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Date: August 16, 2010
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EXHIBIT INDEX
10.1
Three-Year
Term Credit Agreement, dated as of August 13, 2010, among Aon Corporation,
Credit Suisse AG, as administrative agent, the lenders party thereto, Morgan
Stanley Senior Funding, Inc., as syndication agent, Bank of America, N.A.,
Deutsche Bank Securities Inc. and RBS Securities Inc., as co-documentation
agents, Credit Suisse Securities (USA) LLC
and Morgan Stanley Senior Funding, Inc., as joint lead arrangers
and joint bookrunners, and Bank of America, N.A., Deutsche Bank Securities Inc.
and RBS Securities Inc. as co-arrangers
10.2
Senior
Bridge Term Loan Credit Agreement, dated as of August 13, 2010, among Aon
Corporation, Credit Suisse AG, as administrative agent, the lenders party
thereto, Morgan Stanley Senior Funding, Inc., as syndication agent, Bank
of America, N.A., Deutsche Bank Securities Inc. and RBS Securities Inc., as
co-documentation agents, Credit Suisse Securities (USA) LLC and Morgan Stanley Senior Funding, Inc.,
as joint lead arrangers and joint bookrunners, and Bank of America, N.A.,
Deutsche Bank Securities Inc. and RBS Securities Inc. as co-arrangers
10.3
Amendment
No. 1 to the Credit Agreement, dated as of December 4, 2009, among
Aon, Citibank, N.A., as administrative agent, JP Morgan Chase Bank, N.A., as
syndication agent, and the lenders party thereto, among Aon Corporation,
Citibank, N.A., as administrative agent, and the lenders party thereto, dated
as of August 13, 2010
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