Summary
Copart, Inc. (CPRT) announced on March 6, 2008, the execution of a significant credit agreement with Bank of America, N.A. This agreement establishes a $200 million unsecured revolving credit facility, which includes sublimits for foreign currency borrowings and letters of credit. The facility provides Copart with financial flexibility for various corporate needs, including stock repurchases, capital expenditures, and working capital. The credit line matures in five years and features annual reductions in availability, indicating a structured repayment plan. The terms of the credit facility also outline interest rate options, commitment fees on unused portions, and specific operating restrictions and financial covenants for Copart, such as leverage and interest coverage ratios. The agreement is guaranteed by Copart's material domestic subsidiaries, reinforcing the creditworthiness of the facility. Investors should view this as a strategic move to enhance financial flexibility and support future growth initiatives.
Key Highlights
- 1Copart entered into a $200 million unsecured revolving credit facility with Bank of America, N.A. on March 6, 2008.
- 2The credit facility has a maturity of five years from the agreement date.
- 3The facility includes a $100 million foreign currency borrowing sublimit and a $50 million letter of credit sublimit.
- 4Funds from the credit facility can be used for stock repurchases, capital expenditures, working capital, and other general corporate purposes.
- 5Interest rates are variable, based on either the Eurocurrency Rate plus a spread or the prime rate, influenced by Copart's leverage ratio.
- 6The agreement contains customary covenants, restrictions on business operations (e.g., debt, dividends), and financial ratios (leverage, interest coverage).
- 7Material domestic subsidiaries of Copart provide a guarantee for the credit facility.