Summary
E. I. du Pont de Nemours and Company ("DuPont") has entered into a significant $4.5 billion three-year senior unsecured Term Credit Agreement, filed on March 24, 2016, with an event date of March 21, 2016. This facility provides substantial financial flexibility, with initial borrowings of $500 million already drawn as a LIBOR Loan, and $4.0 billion remaining available for general corporate purposes. These purposes include debt repayment, working capital needs, and share repurchases, indicating a proactive approach to managing the company's financial structure. The agreement is notable given the announced all-stock merger of equals with The Dow Chemical Company ("Dow"), expected to close in the second half of 2016, forming DowDuPont Inc. The Term Loan Facility includes specific covenants that will apply post-merger, placing limitations on asset dispositions to DowDuPont and restricting guarantees of DowDuPont or Dow's indebtedness. This filing highlights DuPont's ongoing financial strategy amidst major corporate restructuring.
Key Highlights
- 1DuPont secured a $4.5 billion senior unsecured Term Loan Facility maturing on March 22, 2019.
- 2The facility allows for up to seven borrowings within one year of closing, with repaid amounts not being available for re-borrowing.
- 3Initial borrowing of $500 million was made as a LIBOR Loan, with the remaining $4.0 billion commitment available.
- 4Funds from the Term Loan Facility are designated for general corporate purposes, including debt repayment, working capital, and share repurchases.
- 5A key financial covenant requires the ratio of Total Indebtedness to Total Capitalization not to exceed 0.6667.
- 6Post-merger with Dow, the facility imposes additional covenants, including restrictions on asset sales to DowDuPont and guarantees of DowDuPont/Dow debt.
- 7The facility terminates upon the sale or disposition of all or substantially all of DuPont's Agriculture line of business assets to DowDuPont or related entities.