01—Abstract
Summary
Summary of the 8-K filed June 2, 2025. Cited figures are marked; the original filing is the authoritative source.
Cummins Inc. (CMI) has entered into two new credit agreements on June 2, 2025, replacing previous arrangements.
The first is a "5-Year Credit Agreement" maturing on June 2, 2030, with a total aggregate outstanding amount of up to $2.0 billiona. This agreement amends and restates a prior agreement from June 3, 2024. Concurrently, the company also established a "3-Year Credit Agreement" maturing on June 2, 2028, also with a total aggregate outstanding amount of up to $2.0 billion.
This replaces a 364-day credit agreement that expired on June 2, 2025. Both credit facilities are unsecured and include Cummins' guarantee for subsidiary borrowings. They offer flexibility in borrowing types, including revolving loans, swingline loans, and letters of credit.
The company also retains the option to request incremental term loans or increase availability by up to $1.0 billionb under each agreement, subject to certain conditions. The interest rates are variable, based on benchmark rates and Cummins' credit rating, with the current applicable rate for certain borrowing types being 0.75% given its A2/A ratings from Moody's and S&P, respectively. A key financial covenant requires the debt-to-capital ratio not to exceed 0.65:1.
02—Key points
Key Highlights
- Cummins Inc. executed new unsecured credit facilities totaling up to $4.0 billion in aggregate borrowing capacity.
- A new "5-Year Credit Agreement" provides $2.0 billion in revolving, swingline, and letter of credit facilities, maturing in June 2030.
- A new "3-Year Credit Agreement" provides $2.0 billion in revolving, swingline, and letter of credit facilities, maturing in June 2028, replacing a previous 364-day facility.
- Both agreements are unsecured, with Cummins providing guarantees for subsidiary borrowings.
- The company can request up to an additional $1.0 billion under each credit agreement, for a potential total of $6.0 billion, subject to lender consent and other conditions.
- Interest rates are variable, tied to benchmarks and Cummins' credit rating, currently suggesting an Applicable Rate of 0.75% for certain borrowings based on A2/A credit ratings.
- A financial covenant limits the consolidated net debt to total capital ratio to a maximum of 0.65:1.
03—Questions
Frequently Asked Questions
What is the total borrowing capacity under these new credit agreements?
The total borrowing capacity under the two new credit agreements is up to $2.0 billion under the 5-Year Credit Agreement and up to $2.0 billion under the 3-Year Credit Agreement, for a combined total of $4.0 billion. The company also has the option to increase availability by up to $1.0 billion under each agreement, potentially raising the total capacity to $6.0 billion.
Are these new credit facilities secured?
No, the borrowings under both the 5-Year Credit Agreement and the 3-Year Credit Agreement are unsecured. They do not involve liens on any of Cummins' or its subsidiaries' assets.
What are the maturity dates for these new credit agreements?
The "5-Year Credit Agreement" matures on June 2, 2030, and the "3-Year Credit Agreement" matures on June 2, 2028.
What is the key financial covenant included in these agreements?
A key financial covenant requires that the ratio of consolidated net debt to consolidated total capital of Cummins and its subsidiaries not exceed 0.65:1 as of the last day of each fiscal quarter.
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