Summary
This 8-K filing by Caterpillar Inc. (CAT) dated September 21, 2010, primarily details the establishment of two new unsecured revolving credit facilities: a 364-day facility totaling up to $3.516 billion and a 4-year facility totaling up to $2.089 billion. These facilities are designed to support Caterpillar's and Caterpillar Financial Services Corporation's commercial paper programs and for general corporate purposes, offering a significant liquidity backstop. The company also amended an existing five-year credit agreement to align its terms with these new facilities. Importantly, Caterpillar has not yet drawn on these new credit facilities, indicating a proactive liquidity management strategy. The filing outlines key financial covenants for both Caterpillar and Cat Financial, including minimum consolidated net worth for Caterpillar and specific interest coverage and leverage ratios for Cat Financial. These covenants are crucial for investors to monitor, as adherence is a condition for drawing on the facilities and reflects the company's ongoing financial health.
Key Highlights
- 1Caterpillar Inc. established a new 364-day unsecured revolving credit facility of up to $3.516 billion, expiring September 15, 2011.
- 2A new 4-year unsecured revolving credit facility of up to $2.089 billion, expiring September 15, 2014, was also created.
- 3These credit facilities are intended to backstop commercial paper programs and provide for general corporate purposes.
- 4No amounts have been drawn on these newly established credit facilities as of the filing date.
- 5The 364-day facility includes options for borrowing in various currencies up to a specified equivalent amount.
- 6The 4-year facility also allows for foreign currency borrowings, with different equivalent amount limits.
- 7An amendment was made to Caterpillar's existing five-year credit agreement (dated Sept 20, 2007) to harmonize its terms with the new facilities.