8-KMaterial AgreementsExhibits & Filings

Amcor plc 8-K Report, Material Agreement (Mar 31, 2021)

Filed March 31, 2021For Securities:AMCRAMCCF

Summary

Amcor plc (AMCR) filed an 8-K on March 31, 2021, reporting material definitive agreements related to amendments to its syndicated facility agreements. Specifically, the company entered into Second Amendments to its Three-Year, Four-Year, and Five-Year Syndicated Facility Agreements. These amendments, dated March 30, 2021, primarily focus on extending the maturity dates of these credit facilities by one year each. This extension provides Amcor with enhanced financial flexibility and a longer runway for its debt obligations. Key changes include the addition of LIBOR benchmark replacement language, a revised EBITDA definition to incorporate additional addbacks and deductions, the removal of a minimum net interest expense coverage ratio financial covenant, and an increase in the maximum permitted leverage ratio. The general debt and lien baskets have also been expanded. Importantly, the total borrowing commitment amounts under these facilities remain unchanged, indicating that the amendments are primarily structural and aimed at optimizing the company's debt profile and covenant flexibility rather than increasing its borrowing capacity at this time.

Key Highlights

  • 1Amcor plc amended its Three-Year, Four-Year, and Five-Year Syndicated Facility Agreements on March 30, 2021.
  • 2The amendments extend the maturity date of each credit facility by one year, providing extended financial flexibility.
  • 3Key revisions include the addition of LIBOR benchmark replacement provisions.
  • 4The definition of EBITDA has been updated to include certain additional addbacks and deductions.
  • 5A financial covenant requiring compliance with a minimum net interest expense coverage ratio has been removed.
  • 6The maximum permitted leverage ratio has been increased, with provisions for further increases upon qualified transactions.
  • 7The total borrowing commitment amounts under the facility agreements remain unchanged.

Frequently Asked Questions

The primary impact is an extension of the maturity dates for the Three-Year, Four-Year, and Five-Year syndicated credit facilities by one year each. This provides Amcor with extended financial flexibility and a longer period before these debts need to be repaid or refinanced.

No, the total borrowing commitment amount for each of the facility agreements remains unchanged. The amendments focus on the terms and flexibility of the existing credit lines rather than increasing the overall borrowing capacity.

The revision of the EBITDA definition to include certain additional addbacks and deductions generally allows for a higher reported EBITDA. This can be beneficial for Amcor as it might positively impact its ability to meet financial covenants, particularly the increased leverage ratio.

The removal of this covenant, along with the increased leverage ratio, suggests that Amcor is seeking to de-emphasize interest coverage as a key metric for its lenders and instead focus on its overall debt-to-EBITDA leverage. This could offer Amcor more flexibility in managing its interest expenses and capital structure.