Summary
Cisco Systems, Inc. (CSCO) has entered into a Second Amended and Restated Credit Agreement, effective May 13, 2021. This agreement establishes a five-year, $3.0 billion unsecured revolving credit facility with a syndicate of lenders led by Bank of America, N.A. The facility includes provisions for increasing the borrowing capacity up to $5.0 billion and extending the maturity date. A key feature is the incorporation of sustainability-linked mechanics, where interest rates and commitment fees can be adjusted based on Cisco's performance against specific social impact and foam reduction targets. This updated credit facility provides Cisco with significant financial flexibility and reinforces its commitment to environmental and social governance (ESG) initiatives. The inclusion of sustainability metrics in its financing demonstrates a strategic alignment between financial health and corporate responsibility, which could be viewed favorably by investors focused on long-term value and ESG performance.
Key Highlights
- 1Cisco secured a $3.0 billion unsecured revolving credit facility with a five-year term.
- 2The facility has flexibility to increase total borrowing capacity up to $5.0 billion.
- 3The maturity date can be extended by up to an additional year, twice.
- 4Interest rates and commitment fees are linked to Cisco's senior debt credit ratings.
- 5Sustainability-linked mechanics are incorporated, adjusting costs based on achieving social impact and foam reduction targets.
- 6The agreement includes customary covenants, such as maintaining a minimum consolidated EBITDA to interest expense ratio of 3.0 to 1.0.
- 7Bank of America, N.A. serves as the administration agent and a key lender.