Summary
This 8-K filing by Cummins Inc. (CMI) announces the entry into an amended and restated credit agreement, effective November 13, 2015. The new credit agreement establishes a revolving credit facility of up to $1.75 billion, maturing on November 13, 2020. This facility is unsecured, and borrowings are guaranteed by the parent company for any subsidiary borrowers. This action effectively replaces the prior credit agreement, which was set to mature in 2018, though no amounts were outstanding under the previous agreement. The new agreement includes provisions for various interest rate options tied to benchmark rates and Cummins' credit rating, which at the time of filing was rated A2 by Moody's and A+ by S&P.
Key Highlights
- 1Cummins Inc. entered into a new $1.75 billion unsecured credit agreement.
- 2The new agreement matures on November 13, 2020.
- 3This facility replaces a prior credit agreement dated November 9, 2012.
- 4No borrowings were outstanding under the previous credit agreement.
- 5Interest rates are variable, based on prime rate, federal funds rate, or Adjusted LIBO Rate plus a spread.
- 6The spread on the Adjusted LIBO Rate depends on Cummins' credit rating (currently A2/A+).
- 7The agreement includes standard financial and other covenants.
Frequently Asked Questions
The primary purpose of this filing is to report Cummins Inc.'s entry into a new, amended, and restated credit agreement, which provides the company with access to a significant revolving credit facility.
The new credit agreement provides for revolving and swingline loans and letters of credit, with an aggregate outstanding amount of up to $1.75 billion. The facility matures on November 13, 2020.
No, the new credit agreement specifies that the borrowings will not be secured with liens on any of the company’s or its subsidiaries’ assets, making it an unsecured facility.
Borrowings can bear interest at various rates, including a prime rate option, the federal funds effective rate plus a spread, or the Adjusted LIBO Rate plus a spread (ranging from 0.50% to 1.00%) which is contingent on Cummins' senior unsecured long-term debt credit rating.