8-KMaterial AgreementsExhibits & Filings

CUMMINS INC 8-K Report, Material Agreement (Dec 7, 2004)

Filed December 7, 2004For Securities:CMI

Summary

Cummins Inc. (CMI) announced on December 7, 2004, the execution of a new $650 million unsecured, five-year revolving credit agreement, effective December 1, 2004. This new facility replaces a previous secured credit agreement of $385 million that was set to expire in November 2005. The transition to an unsecured facility and the increase in borrowing capacity are significant developments that reflect the company's strengthened financial performance and its strategic efforts to improve credit ratings. The new credit agreement provides increased liquidity and improved pricing compared to the previous facility, with a maturity date of December 1, 2009. It is intended for general corporate purposes and letter of credit issuances. While Cummins does not currently anticipate drawing on the facility for debt repayment, its ample availability offers financial flexibility for future growth initiatives. The expanded syndicate includes twenty banks from key global regions, highlighting strong market confidence in Cummins.

Key Highlights

  • 1Cummins Inc. entered into a new $650 million unsecured, five-year revolving credit agreement, maturing December 1, 2009.
  • 2The new credit facility replaces a prior secured $385 million facility that was due to expire in November 2005.
  • 3The transition to an unsecured facility signifies improved credit ratings and strengthened financial performance for Cummins.
  • 4The borrowing capacity has been significantly increased from $385 million to $650 million.
  • 5The new agreement offers improved pricing and enhanced liquidity for general corporate purposes and letter of credit issuance.
  • 6Twenty global banks are participating in the new revolving credit facility, indicating broad market support.
  • 7Guarantees for the new credit facility are provided by several wholly-owned subsidiaries of Cummins.

Frequently Asked Questions

The new $650 million unsecured revolving credit agreement is primarily for general corporate purposes and for the issuance of letters of credit. It provides enhanced liquidity and financial flexibility for Cummins Inc.

The move to an unsecured credit facility signifies that Cummins has demonstrated strengthened financial performance and is taking steps to improve its credit ratings. This is generally viewed positively by investors as it indicates a lower cost of capital and increased financial stability.

The new credit agreement has a larger borrowing capacity of $650 million compared to the previous $385 million facility. It also has a longer term of five years, maturing on December 1, 2009, whereas the old agreement was for three years and was set to expire in November 2005.

Cummins has not borrowed on its current revolving credit facility since December 2003. However, the company currently utilizes $120 million of its availability for letters of credit.