8-KMaterial AgreementsFinancial EventsExhibits & Filings

CISCO SYSTEMS, INC. 8-K Report, Material Agreement (Feb 17, 2012)

Filed February 17, 2012For Securities:CSCO

Summary

Cisco Systems, Inc. (CSCO) has filed an 8-K report on February 17, 2012, announcing the entry into a new $3 billion unsecured revolving credit facility. This facility, which replaces a previous credit line, is set to mature on February 17, 2017, and can be expanded up to $5 billion with the option to extend its maturity date. The company has not drawn any funds from this new facility as of the filing date. The new credit agreement includes provisions for interest rates based on market rates (such as Federal Funds rate or LIBOR) plus a margin determined by Cisco's senior debt credit ratings. It also requires Cisco to maintain a minimum consolidated EBITDA to consolidated interest expense ratio of 3.00 to 1.00, along with other customary covenants and events of default. The termination of the prior credit facility was a consequence of entering into this new agreement.

Key Highlights

  • 1Cisco entered into a new $3 billion unsecured revolving credit facility on February 17, 2012.
  • 2The new facility replaces a previous credit line that was terminated on the same date.
  • 3The credit facility has an initial expiration date of February 17, 2017.
  • 4Cisco has the option to increase the facility size to $5 billion and extend the maturity date.
  • 5Interest rates are variable, based on benchmarks like LIBOR or prime rate, plus a credit rating-dependent margin.
  • 6The agreement includes a covenant requiring a minimum consolidated EBITDA to interest expense ratio of 3.00:1.00.
  • 7No borrowings were outstanding under the prior credit facility at the time of its termination.

Frequently Asked Questions

This 8-K filing announces that Cisco Systems, Inc. has entered into a new material definitive agreement, specifically a $3 billion unsecured revolving credit facility, and has simultaneously terminated a previous credit facility.

The new facility is for $3 billion, unsecured, and revolving, with an initial expiration on February 17, 2017. It allows for potential increases up to $5 billion and extension of the maturity date. Interest rates are based on market benchmarks (e.g., LIBOR) plus a margin tied to Cisco's credit ratings. It also includes covenants such as maintaining an EBITDA to interest expense ratio of at least 3.00:1.00.

No, as of the filing date of February 17, 2012, Cisco had not borrowed any funds under the new Credit Agreement.

The previous five-year, $3 billion unsecured revolving credit facility, established on August 17, 2007, was terminated on February 17, 2012, in connection with the establishment of the new credit facility. No borrowings were outstanding under the prior facility at the time of its termination.