8-KMaterial AgreementsExhibits & Filings

Booking Holdings Inc. 8-K Report, Material Agreement (Oct 30, 2020)

Filed October 30, 2020For Securities:BKNG

Summary

Booking Holdings Inc. (BKNG) filed an 8-K on October 30, 2020, to disclose a material amendment to its $2 billion revolving credit facility. The most significant change is the further suspension of the maximum leverage ratio covenant through March 31, 2022. During this period, the Company will be subject to a minimum liquidity covenant, requiring a certain level of unrestricted cash, cash equivalents, short-term investments, and unused credit facility capacity. This amendment provides Booking Holdings with increased financial flexibility during a period of uncertainty, allowing it to manage its liquidity without immediate pressure from a strict leverage ratio. However, the amendment also imposes restrictions on cash distributions and share repurchases until certain liquidity and leverage ratio requirements are met. Investors should monitor the Company's liquidity position and its progress towards meeting the reinstated leverage covenant requirements in future periods.

Key Highlights

  • 1Booking Holdings amended its $2 billion revolving credit facility on October 28, 2020.
  • 2The maximum leverage ratio covenant is suspended through March 31, 2022.
  • 3A minimum liquidity covenant replaces the leverage ratio covenant during the suspension period.
  • 4The amendment restricts cash dividends and share repurchases until specific liquidity and leverage conditions are met.
  • 5The maximum leverage ratio covenant, with an increased permitted ratio, will be reinstated from June 30, 2022.
  • 6The company can terminate dividend/repurchase restrictions earlier if it meets the original leverage ratio covenant.

Frequently Asked Questions

The primary impact is the suspension of the maximum leverage ratio covenant until March 31, 2022. This is replaced by a minimum liquidity covenant, which requires the company to maintain a certain level of readily available funds.

The amendment imposes restrictions on cash dividends and share repurchases. These actions are prohibited unless the company meets certain liquidity thresholds (at least $6.0 billion before Q2 2022 financials) and, after Q2 2022, is in compliance with the leverage ratio covenant on a pro forma basis.

The minimum liquidity covenant ceases to apply beginning with the fiscal quarter ending June 30, 2022. At that point, the maximum leverage ratio covenant, with an increased permitted ratio, will be back in effect.

Yes, by suspending the leverage ratio covenant, the amendment provides Booking Holdings with greater flexibility to borrow under its $2 billion revolving credit facility without immediately violating a key financial covenant, especially during uncertain economic conditions.