Summary
Caterpillar Inc. (CAT) filed an 8-K report on September 26, 2006, detailing a significant event on September 21, 2006: the execution of a five-year Credit Agreement. This agreement establishes a "Five Year Facility" with a committed capacity of $2.975 billion from 22 financial institutions. The primary purpose of this facility is to serve as a backstop for Caterpillar's commercial paper program, providing assurance to commercial paper buyers about the availability of funds for repayment. Notably, Caterpillar has historically not drawn upon this facility, indicating strong internal liquidity or access to other funding sources. The Credit Agreement also includes specific addendums to allow for local currency borrowing. A Japan Local Currency Addendum permits Caterpillar Financial Services Corporation (CFSC) to borrow up to the equivalent of US$100 million in Japanese yen. Additionally, a broader Local Currency Addendum allows Caterpillar International Finance p.l.c. to borrow in Euros, Pounds Sterling, and other permitted currencies, up to a limit equivalent to US$1 billion. These provisions enhance Caterpillar's financial flexibility by enabling it to manage foreign currency needs directly.
Key Highlights
- 1Caterpillar entered into a new five-year Credit Agreement on September 21, 2006.
- 2The agreement establishes a committed credit facility totaling $2.975 billion.
- 3This facility primarily acts as a backstop for Caterpillar's commercial paper program, ensuring repayment assurance.
- 4Caterpillar has never drawn on this facility, suggesting robust liquidity or alternative funding sources.
- 5Local currency borrowing capabilities are included through addendums.
- 6Up to US$100 million equivalent can be borrowed in Japanese yen by Caterpillar Financial Services Corporation.
- 7Up to US$1 billion equivalent can be borrowed in Euros, Pounds Sterling, and other currencies by Caterpillar International Finance p.l.c.