8-KMaterial AgreementsFinancial EventsExhibits & Filings

CATERPILLAR INC 8-K Report, Material Agreement (Dec 7, 2010)

Filed December 7, 2010For Securities:CAT

Summary

Caterpillar Inc. (CAT) filed an 8-K on December 7, 2010, detailing the execution of a $8.6 billion unsecured Bridge Loan Agreement, dated December 3, 2010. This facility is intended to finance a portion of the cash consideration for Caterpillar's acquisition of Bucyrus International, Inc., refinance existing Bucyrus debt, and cover related expenses. The Bridge Loan Agreement is subject to customary closing conditions, including the absence of a material adverse effect on Bucyrus and Caterpillar's maintenance of certain credit ratings. Investors should note that Caterpillar has the option to issue senior notes and/or equity in lieu of drawing on the bridge facility, or to refinance it later. The agreement includes standard representations, warranties, covenants, and events of default, with a key financial covenant requiring Caterpillar to maintain a consolidated net worth of at least $9 billion. This filing provides insight into Caterpillar's financing strategy for a significant strategic acquisition.

Key Highlights

  • 1Caterpillar entered into an $8.6 billion unsecured Bridge Loan Agreement on December 3, 2010.
  • 2The facility is primarily intended to fund a portion of the cash consideration for the Bucyrus International, Inc. acquisition.
  • 3Proceeds can also be used to refinance existing Bucyrus indebtedness and cover transaction fees.
  • 4Caterpillar retains the flexibility to issue debt or equity instead of drawing on the bridge loan, or to refinance it later.
  • 5The funding is contingent on certain conditions, including no material adverse effect on Bucyrus and maintenance of specific credit ratings.
  • 6A key financial covenant requires Caterpillar to maintain a minimum consolidated net worth of $9 billion.

Frequently Asked Questions

The primary purpose of the $8.6 billion bridge loan is to provide financing for a portion of the cash consideration required for Caterpillar's acquisition of Bucyrus International, Inc. It will also be used to refinance existing indebtedness of Bucyrus and to cover related transaction fees and expenses.

Yes, Caterpillar has the flexibility to issue senior notes and/or equity in lieu of drawing all or a portion of the bridge facility. Additionally, if Caterpillar does borrow under the Bridge Facility, it may refinance all or a portion of it at a later date.

The funding of the bridge facility is subject to certain conditions, including the absence of a Closing Company Material Adverse Effect (as defined in the merger agreement related to the Bucyrus acquisition) and the maintenance by Caterpillar of certain minimum credit ratings.

A significant financial covenant requires Caterpillar to maintain a consolidated net worth of not less than US$9 billion at all times. Consolidated net worth is defined as consolidated stockholder's equity, including preferred stock, but excluding the pension and other post-retirement benefits balance within Accumulated other comprehensive income (loss).