8-KMaterial AgreementsFinancial EventsExhibits & Filings

CHURCH & DWIGHT CO INC /DE/ 8-K Report, Material Agreement (Mar 28, 2017)

Filed March 28, 2017For Securities:CHD

Summary

Church & Dwight Co., Inc. (CHD) has announced the execution of a new Credit Agreement on March 27, 2017, establishing a $200 million unsecured term loan credit facility. This facility, provided by Bank of America, N.A., offers flexibility in borrowing and is available until May 15, 2017, with principal repayment due by September 27, 2018. The agreement includes variable interest rates based on LIBOR or a Base Rate, plus an applicable margin determined by the company's credit rating. This new debt facility is a significant development for the company's financial flexibility and operational planning. The Credit Agreement is subject to customary covenants, including restrictions on liens, investments, and subsidiary debt, and mandates the maintenance of a specific leverage ratio (Consolidated Funded Indebtedness to Consolidated EBITDA) not exceeding 3.50 to 1.00, with a temporary allowance of 3.75 to 1.00 following a material acquisition. The agreement also outlines standard events of default, such as payment failures, covenant breaches, or significant adverse changes. Investors should note this as a strategic move to bolster liquidity and support potential future growth initiatives.

Key Highlights

  • 1Execution of a new $200 million unsecured term loan credit facility with Bank of America, N.A.
  • 2Facility available for single draw between March 27, 2017, and May 15, 2017.
  • 3Principal repayment due by September 27, 2018.
  • 4Variable interest rates based on Adjusted LIBOR or Base Rate plus an applicable margin tied to credit rating.
  • 5Commitment fees also based on credit rating, ranging from 0.075% to 0.25%.
  • 6Key covenants include leverage ratio maintenance (max 3.50:1.00, or 3.75:1.00 post-acquisition) and restrictions on liens, investments, and subsidiary debt.
  • 7Customary events of default are defined, including payment defaults, covenant breaches, and change of control.

Frequently Asked Questions

While the filing does not explicitly state the purpose, a new $200 million unsecured term loan facility typically provides companies with increased financial flexibility, potentially for working capital, capital expenditures, acquisitions, or general corporate purposes. It serves to bolster the company's liquidity.

The company is obligated to repay the principal by September 27, 2018. Key financial covenants include maintaining a leverage ratio of no more than 3.50 to 1.00 (with a temporary waiver to 3.75 to 1.00 after a material acquisition) and adhering to customary restrictions on liens, investments, and subsidiary indebtedness.

The interest rate will be a variable rate, calculated as either the Adjusted LIBOR rate or the Base Rate (which is tied to the Federal Funds Rate and Bank of America's prime rate), plus an applicable margin. This margin fluctuates between 0.875% and 1.75% for LIBOR-based loans, and 0% to 0.75% for Base Rate loans, depending on Church & Dwight's public corporate credit rating.

Yes, the company will incur customary fees, including a commitment fee. This fee is determined by the company's public corporate credit rating and ranges from 0.075% to 0.25% per annum on the aggregate outstanding commitments under the Credit Agreement.