MMC Refinances Over Commissions Loss

NU Online News Service, Dec. 16, 2:57 p.m.EST?Marsh & McLennan Companies Inc. said it hascompleted a $3 billion refinancing after revenue problems linked toits difficulties over suspect commission charges.[@@]

According to the company, the new credit arrangement becamenecessary when New York-based MMC said it would eliminatecontroversial Market Service Arrangements, a form of contingentcommission, amounting to more than $800 million in revenue. Theloss in revenue resulted in the layoff of more than 3,000employees.

The move became necessary after New York Attorney General EliotSpitzer sued insurance MMC, accusing its Marsh brokerage subsidiaryof taking payoffs in the form of commissions to rig bids forinsurance contracts with carriers who were part of the scheme.

MMC and Mr. Spitzer have yet to announce a settlement of thesuit, but it is expected to exceed more than $500 million.

The new financing consists of a new $1.3 billion term loan andthe amendment of $1.7 billion of existing revolving credit.

The term loan matures on Dec. 31, 2006 and replaces creditfacilities of $700 million and $355 million, which were due tomature in 2005. The amended revolving facilities include $1 billiondue June 2007 and $700 million due June 2009.

The new arrangement involved 22 banks, led by Citibank, Bank ofAmerica and Deutsche Bank AG New York Branch.