Summary
Adobe Inc. (ADBE) has filed an 8-K report on October 18, 2018, detailing the execution of two significant credit agreements on October 17, 2018. The company entered into a new five-year, $1 billion senior unsecured revolving credit facility, replacing its previous agreement. This new facility provides enhanced financial flexibility and can be expanded by an additional $500 million. Additionally, Adobe secured a senior unsecured term loan of up to $2.25 billion. The primary purpose of the term loan is to finance a portion of the acquisition of Milestone Topco, Inc., the indirect parent of Marketo, Inc., and associated fees. This move underscores Adobe's commitment to its strategic growth initiatives, particularly through acquisitions. Both credit agreements include standard covenants and events of default, with the revolving facility featuring a financial covenant requiring Adobe to maintain a maximum leverage ratio of 3.00:1.00.
Key Highlights
- 1Adobe Inc. established a new five-year, $1 billion senior unsecured revolving credit facility, replacing a prior agreement.
- 2The new revolving credit facility has the potential to be expanded by up to an additional $500 million, bringing the total commitment to $1.5 billion.
- 3A new senior unsecured term loan of up to $2.25 billion was secured.
- 4The term loan is intended to fund a portion of the acquisition of Milestone Topco, Inc. (indirect parent of Marketo, Inc.) and related expenses.
- 5Both agreements feature variable interest rates based on LIBOR or a Base Rate plus a margin determined by Adobe's debt ratings.
- 6The revolving credit facility includes a financial covenant limiting the maximum leverage ratio to 3.00:1.00.
- 7The prior revolving credit agreement was terminated without outstanding borrowings or termination penalties.