8-KFinancial Events

CATERPILLAR INC 8-K Report, Financial Obligation (Jun 8, 2006)

Filed June 8, 2006For Securities:CAT

Summary

Caterpillar Inc. (CAT) filed an 8-K on June 8, 2006, reporting the execution of a Credit Agreement, referred to as a "bridge facility," with Citibank, N.A., dated June 2, 2006. This facility provides Caterpillar with the ability to borrow up to $1 billion. The primary purpose of this credit facility is to finance the previously announced acquisition of Progress Rail Services, Inc. and for general corporate purposes, serving as a backstop for its existing commercial paper program. This bridge facility is temporary, with a termination date of September 30, 2006. Caterpillar retains the flexibility to terminate the facility earlier or seek alternative financing. Investors should view this as a strategic move to secure necessary funding for a significant acquisition, ensuring financial flexibility during the transaction period.

Key Highlights

  • 1Caterpillar Inc. entered into a $1 billion "bridge facility" credit agreement with Citibank, N.A. on June 2, 2006.
  • 2The primary purpose of the credit facility is to finance the acquisition of Progress Rail Services, Inc.
  • 3The facility also provides funding for general corporate purposes.
  • 4The bridge facility acts as a backstop to Caterpillar's existing commercial paper program.
  • 5The credit agreement has a termination date of September 30, 2006.
  • 6Caterpillar has the option to terminate the facility earlier or secure alternative financing.
  • 7This move indicates Caterpillar's commitment to the Progress Rail Services acquisition and its management of financing needs.

Frequently Asked Questions

The main purpose of this Credit Agreement, referred to as a "bridge facility," is to finance Caterpillar's acquisition of Progress Rail Services, Inc., a transaction previously announced on May 16, 2006. It also provides funding for other general corporate purposes.

Caterpillar has the ability to borrow up to $1 billion under this bridge facility.

The bridge facility is set to terminate on September 30, 2006. However, Caterpillar has the option to terminate it earlier or replace it with other forms of financing.

No, this bridge facility is intended to serve as a backstop to Caterpillar's existing commercial paper program, meaning it provides an alternative source of funding if needed, rather than replacing it entirely.