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Mercer faces borrowing curb amid Spitzer suit

GLOBAL – Consulting firm Mercer faces a curb on further borrowing as parent firm Marsh & McLennan Companies deals with a lawsuit from New York Attorney General Eliot Spitzer.

MMC said it has agreed with its lenders that it would not permit any of its subsidiaries – which include Mercer as well as asset management firm Putnam Investments - to incur debt other than under “existing facilities”.

MMC was last week sued by Spitzer, who said the firm solicited rigged bids for insurance contracts. There was no suggestion that Mercer itself was involved.

MMC has now said in a filing to the Securities and Exchange Commission that the matters raised by Spitzer’s suit “may prohibit MMC from borrowing under the facilities, which contain standard representations as to no material adverse litigation and compliance with laws”.

It added: “The required lenders under each of the facilities have agreed to waive the effect of such matters until December 30, 2004.

“In exchange, MMC has agreed that the facilities will be used exclusively to support commercial paper borrowings, and that in order for MMC to borrow under the facilities, the aggregate face amount of outstanding commercial paper cannot exceed 1.9 billion dollars.

MMC said it would start talks with its lenders immediately to amend or replace the facilities to provide longer-term support for its commercial paper borrowings.

MMC has cash of around 375 million dollars. It maintains four revolving credit facilities aggregating 2.755 billion dollars.

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