Summary
Cummins Inc. (CMI) announced on August 18, 2021, that it has entered into two new credit agreements, superseding prior arrangements. The first is a five-year revolving credit facility totaling $2.0 billion, maturing on August 18, 2026. The second is a 364-day revolving credit facility of up to $1.5 billion, with a commitment termination date of August 17, 2022. These agreements provide Cummins with significant liquidity and flexibility, with options for incremental borrowing and conversion of revolving loans to term loans under the 364-day facility.
Key Highlights
- 1Cummins entered into a new $2.0 billion, 5-year credit agreement maturing in August 2026.
- 2A new $1.5 billion, 364-day credit agreement has been established, maturing in August 2022.
- 3The new credit facilities are unsecured, meaning no specific company assets are pledged as collateral.
- 4The company retains the option to request up to $750 million in incremental loans/availability under the 364-day agreement and up to $1.0 billion under the 5-year agreement, subject to conditions.
- 5A 'Term-Out Option' allows conversion of outstanding revolving loans under the 364-day facility into term loans maturing one year after the commitment termination date, with a 0.5% fee.
- 6Interest rates will vary based on loan type and benchmark rates (e.g., prime rate, Adjusted LIBO Rate, Adjusted EURIBO Rate, Daily Simple RFR), with an 'Applicable Rate' based on credit ratings.
- 7The agreements include customary covenants, with a key financial covenant requiring the ratio of consolidated net debt to consolidated total capital not to exceed 0.65:1.