Summary
Caterpillar Inc. (CAT) filed an 8-K report on September 16, 2011, detailing the establishment of significant new credit facilities. The company, along with its subsidiaries Caterpillar Financial Services Corporation, Caterpillar International Finance Limited, and Caterpillar Finance Corporation, entered into a US$2.550 billion 364-day revolving credit facility and a US$3.861 billion 5-year revolving credit facility. These facilities are unsecured and intended to support commercial paper programs and for general corporate purposes, demonstrating Caterpillar's proactive approach to managing its liquidity and financing flexibility. Furthermore, Caterpillar also amended an existing 2010 credit agreement to align its terms with the new facilities. The new credit agreements include financial covenants, such as a minimum consolidated net worth requirement for Caterpillar of US$9 billion and specific liquidity and leverage ratios for Caterpillar Financial Services Corporation. These arrangements highlight the company's commitment to maintaining a strong financial position and ensuring access to capital for its operations.
Key Highlights
- 1Establishment of a new US$2.550 billion 364-day revolving credit facility.
- 2Establishment of a new US$3.861 billion 5-year revolving credit facility.
- 3Total new unsecured revolving credit facilities amount to approximately US$6.411 billion.
- 4These facilities are designed to support commercial paper programs and general corporate needs.
- 5An amendment was made to an existing 2010 credit agreement to ensure consistency with the new facilities.
- 6Financial covenants include a minimum consolidated net worth of US$9 billion for Caterpillar.
- 7Caterpillar Financial Services Corporation must maintain an interest coverage ratio above 1.15 to 1 and a leverage ratio below 10.0 to 1.