Summary
Danaher Corporation (DHR) has filed an 8-K report to disclose the entry into a material definitive agreement concerning a new credit facility. This report details a $1.5 billion unsecured five-year credit facility secured by its wholly-owned subsidiary, Veralto Corporation. The facility, effective August 31, 2023, with a maturity date of August 31, 2028, provides Veralto with significant liquidity and flexibility. The credit facility includes provisions for an extension option and an expansion option of up to $500 million, indicating potential future financing needs or growth opportunities. The terms of the facility establish interest rate mechanisms tied to Veralto's credit rating and include a facility fee. Crucially, Veralto is required to maintain a specific Consolidated Net Leverage Ratio, with a temporary increase allowed following significant acquisitions. This facility is intended to support Veralto's commercial paper program and general corporate purposes, and borrowings are contingent upon the completion of the previously announced separation of Danaher's Environmental & Applied Solutions business into Veralto.
Key Highlights
- 1DHR's subsidiary, Veralto Corporation, has entered into a new $1.5 billion unsecured five-year credit facility.
- 2The facility matures on August 31, 2028, with a one-year extension option.
- 3Veralto has an expansion option to increase borrowings by up to an additional $500 million.
- 4Interest rates are variable and dependent on Veralto's long-term debt credit rating, ranging from Term SOFR plus 79.5-130.0 basis points for USD loans.
- 5A facility fee of 8.0 to 20.0 basis points annually applies, based on Veralto's credit rating.
- 6Veralto must maintain a Consolidated Net Leverage Ratio of 3.75:1.00 or less, with a temporary allowance up to 4.25:1.00 after acquisitions over $100 million.
- 7Borrowings are permissible only after the completion of Veralto's separation from Danaher and will be used for liquidity support and general corporate purposes.