01—Abstract
Summary
Summary of the 8-K filed March 23, 2022. Cited figures are marked; the original filing is the authoritative source.
Cintas Corporation (CTAS) announced the execution of a Third Amended and Restated Credit Agreement on March 23, 2022, establishing a new $2,000 milliona revolving credit facility.
This facility replaces prior credit arrangements and features a letter of credit sub-facility of up to $300 million and a swing line sub-facility of up to $150 millionb. The new credit facility matures on March 23, 2027, providing the company with significant financial flexibility and access to capital for at least the next five years. The agreement includes provisions for increasing commitments or adding new term loan facilities, subject to certain conditions, up to an additional $500 million.
The interest rate structure is tied to SOFR or a Base Rate, with applicable margins. The credit agreement also imposes customary covenants on Cintas No. 2, the Corporation, and its guarantors, including limitations on liens, asset sales, and affiliate transactions, along with key financial covenants such as leverage and interest coverage ratios. The company also furnished a press release detailing its financial results for the quarter ended February 28, 2022.
02—Key points
Key Highlights
- Cintas entered into a new $2,000 million revolving credit facility maturing in March 2027.
- The facility replaces existing credit arrangements, indicating a refinancing or upgrade of its debt structure.
- It includes a $300 million letter of credit sub-facility and a $150 million swing line sub-facility.
- The company has the option to increase revolving commitments or add new term loan facilities up to an additional $500 million.
- Interest rates are variable, based on SOFR or Base Rate, plus an applicable margin.
- The agreement includes standard financial covenants, such as maintaining a leverage ratio below 3.50:1.00 and an interest coverage ratio of at least 3.00:1.00.
- The filing also incorporated by reference a press release on Cintas's financial results for the quarter ended February 28, 2022.
03—Questions
Frequently Asked Questions
What is the primary purpose of this 8-K filing?
The primary purpose of this 8-K filing is to report the entry into a material definitive agreement, specifically a new $2,000 million Third Amended and Restated Credit Agreement that establishes a significant revolving credit facility for Cintas Corporation. It also incorporates by reference a press release detailing the company's recent financial results.
What is the maturity date of the new credit facility?
The new revolving credit facility matures on March 23, 2027.
Are there any financial covenants associated with this credit agreement?
Yes, the credit agreement includes financial covenants that require Cintas Corporation to maintain a leverage ratio of consolidated indebtedness to consolidated EBITDA of no more than 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 a limit on priority debt not to exceed 15% of consolidated total capitalization.
Does this new credit facility provide Cintas with additional borrowing capacity beyond the $2,000 million?
Yes, the Credit Agreement provides Cintas No. 2 with the ability to request increases in revolving commitments or new term loan facilities of up to an aggregate of $500 million, subject to customary conditions.
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