8-KOther EventsExhibits & Filings

BOSTON SCIENTIFIC CORP 8-K Report, Corporate Update (Jul 1, 2013)

Filed July 1, 2013For Securities:BSX

Summary

Boston Scientific Corporation (BSX) has announced an amendment to its credit agreement, specifically related to its U.S. trade accounts receivables facility. This amendment, effective June 28, 2013, extends the term of this receivables facility by two years, now expiring on June 26, 2015. This extension provides continued access to funding secured by the company's receivables. While the facility's term has been extended, its size has been reduced from $350 million to $300 million. The amendment also introduces a maximum leverage covenant, which could impact future borrowing capacity or require proactive financial management to ensure compliance. Additionally, it allows lenders to defer funding for up to 33 days under certain conditions, introducing a potential, albeit temporary, delay in fund availability. The company also made technical amendments to related agreements and modified associated fees.

Key Highlights

  • 1Extension of the U.S. trade accounts receivables facility by two years to June 26, 2015.
  • 2Reduction in the receivables facility size from $350 million to $300 million.
  • 3Introduction of a new maximum leverage covenant into the credit agreement.
  • 4Lenders now have the option to defer funding for up to 33 days on borrowing requests.
  • 5Technical amendments were made to the Credit Agreement and the Receivables Sale Agreement.
  • 6Certain fees associated with the credit facility have been modified via an amended fee letter.

Frequently Asked Questions

The amendment extends the term of the receivables facility by two years, ensuring continued access to a funding source secured by U.S. trade accounts receivables through June 2015. However, the reduction in facility size to $300 million means a decrease in the maximum available funds from this specific source compared to the previous $350 million.

A receivables facility is a type of financing where a company sells its accounts receivable to a financial institution (or borrows against them) to obtain immediate cash. It's an important liquidity tool, allowing companies to convert their outstanding invoices into working capital without waiting for customers to pay. The extension of this facility suggests it remains a relevant source of funding for Boston Scientific.

A maximum leverage covenant is a restriction on how much debt a company can take on relative to its earnings or assets. Introducing this covenant means Boston Scientific will have a limit on its overall debt levels, which could influence its future financing decisions and capital structure management. Investors should monitor the company's leverage ratios to ensure compliance.

While lenders can defer funding for up to 33 days, this is an option, not a certainty. It could introduce a short-term delay in accessing funds from this specific facility if invoked. However, given the company also has a $2 billion senior unsecured credit facility, it's likely Boston Scientific has other liquidity sources to manage any potential short-term funding gaps arising from this deferral option.