8-KMaterial AgreementsFinancial EventsRegulation FD+1

CINCINNATI FINANCIAL CORP 8-K Report, Material Agreement (Jun 1, 2012)

Filed June 1, 2012For Securities:CINF

Summary

Cincinnati Financial Corporation (CINF) announced on May 31, 2012, the execution of a new $225 million unsecured revolving credit facility, referred to as the 2012 Credit Agreement. This facility has a five-year term, maturing on May 31, 2017, and replaces two previous credit lines totaling $225 million. The company also terminated an interest rate swap agreement. This new credit facility provides CINF with significant financial flexibility and liquidity for a five-year period. The agreement includes financial covenants such as maintaining a minimum consolidated net worth and a maximum debt to capital ratio of 30%, which are standard for a company of its nature. The refinancing was executed smoothly, with no early termination penalties incurred for the credit facilities or the interest rate swap, and funds from the new facility were used to repay the outstanding balance on the previous lines of credit.

Key Highlights

  • 1Entered into a new $225 million unsecured revolving credit facility maturing May 31, 2017.
  • 2The new credit facility has a five-year term and is fully subscribed among six lenders.
  • 3The 2012 Credit Agreement replaces two previous unsecured credit lines totaling $225 million.
  • 4Financial covenants include maintaining a minimum consolidated net worth and a maximum debt to capital ratio of 30%.
  • 5Successfully terminated two existing credit facilities and an interest rate swap without incurring early termination penalties.
  • 6Funds from the new credit facility were used to repay $104 million outstanding on the previous 2007 Credit Facility.
  • 7The filing also includes a news release regarding the declaration of a quarterly cash dividend.

Frequently Asked Questions

The new $225 million unsecured revolving credit facility provides CINF with enhanced financial flexibility and liquidity for a five-year period, ensuring access to funds for operational needs and strategic initiatives. It replaces older credit lines with a single, more streamlined facility.

The 2012 Credit Agreement requires Cincinnati Financial Corporation to maintain a minimum consolidated net worth of $3 billion plus fifty percent of consolidated net income and net cash proceeds from equity issuances after March 31, 2012. Additionally, it mandates a maximum debt to capital ratio of 30%.

No, Cincinnati Financial Corporation reported that no early termination or early payment penalties were incurred for the termination of the two old credit lines or the interest rate swap agreement.

At the time of termination, there was $104 million in outstanding principal on the 2007 Credit Facility. Funds to repay this amount, along with accrued interest and fees, were borrowed under the new 2012 Credit Agreement.