01—Abstract
Summary
Summary of the 8-K filed May 30, 2019. Cited figures are marked; the original filing is the authoritative source.
Cintas Corporation (CTAS) has entered into a new credit facility agreement, which includes a $1 billiona revolving credit facility and a $200 million term loan facility.
This new facility, effective May 24, 2019, replaces an existing revolving credit facility and provides Cintas No. 2, a subsidiary, with significant borrowing capacity. The agreement also includes provisions for potential increases in commitments up to an additional $250 millionb. This refinancing enhances Cintas's financial flexibility and provides resources for ongoing operations and potential strategic initiatives.
The revolving credit facility matures in May 2024, and the term loan facility matures in May 2020, offering a balanced maturity profile. The credit agreement incorporates customary covenants and financial ratios, including leverage and interest coverage ratios, designed to ensure financial health and manage risk. These terms are standard for corporate financing and reflect a solid credit standing for the company.
02—Key points
Key Highlights
- Cintas entered into a new $1 billion revolving credit facility and a $200 million term loan facility.
- The new credit facilities replace Cintas No. 2's previous revolving credit facility.
- The revolving credit facility matures in May 2024, and the term loan facility matures in May 2020.
- The agreement allows for potential aggregate increases in borrowing commitments of up to $250 million.
- KeyBank National Association serves as the Administrative Agent for the credit facilities.
- The credit agreement includes financial covenants such as a maximum leverage ratio of 3.50:1.00 and a minimum interest coverage ratio of 3.00:1.00.
- The obligations are guaranteed by Cintas Corporation and certain of its domestic subsidiaries.
03—Questions
Frequently Asked Questions
What is the primary purpose of this new credit agreement for Cintas?
The primary purpose is to provide Cintas No. 2, a subsidiary, with enhanced financial flexibility and access to capital through a $1 billion revolving credit facility and a $200 million term loan facility. This new agreement replaces an older revolving credit facility, likely offering more favorable terms or greater capacity for the company's ongoing business needs and potential growth opportunities.
What are the maturity dates for the new credit facilities?
The revolving credit facility matures in May 2024, while the term loan facility matures in May 2020. Swing loans made under the swing line sub-facility have a shorter maturity, either 15 days after the loan date or by May 2024, whichever is earlier.
Are there any financial performance requirements Cintas must meet under this new agreement?
Yes, the agreement includes financial covenants that Cintas must maintain. These require a consolidated leverage ratio of indebtedness to consolidated EBITDA not to exceed 3.50 to 1.00, an interest coverage ratio of consolidated EBIT to consolidated interest expense of at least 3.00 to 1.00, and aggregate priority debt not to exceed 15% of consolidated total capitalization.
What is the total potential borrowing capacity Cintas has under these facilities?
The core facilities consist of a $1 billion revolving credit facility and a $200 million term loan facility, totaling $1.2 billion. Additionally, Cintas has the option to request increases to these commitments by up to an aggregate of $250 million, which could potentially bring the total borrowing capacity to $1.45 billion, subject to customary conditions.
04—Continue