8-KOther Events

DOVER Corp 8-K Report, Corporate Update (May 12, 2020)

Filed May 12, 2020For Securities:DOV

Summary

Dover Corporation (DOV) announced on May 6, 2020, the establishment of a new $450 million, 364-day revolving credit facility. This facility, secured with a syndicate of nine banks led by Bank of America, N.A. as Administrative Agent, is primarily intended for working capital, general corporate needs, and potential debt repayment. The new credit line matures on May 5, 2021. The terms of the credit agreement include flexibility in interest rate selection between LIBOR and an Alternate Base Rate, with applicable margins tied to Dover's credit rating. Additionally, the company will pay a facility fee on the total commitment amount, also influenced by its creditworthiness. The agreement imposes customary covenants, similar to those in a previous credit facility, restricting asset liens, certain mergers, and asset sales, and requiring the maintenance of a minimum interest coverage ratio of 3.00:1.00 (EBITDA to consolidated net interest expense).

Key Highlights

  • 1Secured a new $450 million, 364-day revolving credit facility to enhance liquidity and support general corporate purposes.
  • 2The credit facility matures on May 5, 2021, providing a one-year liquidity backstop.
  • 3Interest rates are tied to LIBOR or an Alternate Base Rate, with margins ranging from 0.30% to 1.50% based on S&P/Moody's credit ratings.
  • 4A facility fee of 0.20% to 0.50% will be paid on the total commitment amount, also based on credit ratings.
  • 5The agreement includes customary covenants, such as limitations on liens, asset sales, and mergers.
  • 6A minimum interest coverage ratio of 3.00:1.00 (EBITDA to consolidated net interest expense) must be maintained.
  • 7Prepayment of outstanding amounts is required upon the incurrence of new indebtedness for borrowed money, subject to exceptions.

Frequently Asked Questions

The primary purposes of this credit facility are to provide working capital, fund general corporate requirements, and potentially to repay other existing debt of Dover Corporation.

The lenders' commitments under this credit agreement will terminate on May 5, 2021, meaning the facility has a 364-day term.

Dover can elect to borrow at rates based on LIBOR or an Alternate Base Rate. Applicable margins on top of these base rates range from 1.30% to 1.50% for LIBOR loans and 0.30% to 0.50% for Alternate Base Rate loans, depending on Dover's senior unsecured debt credit rating. A facility fee, ranging from 0.20% to 0.50% of the total commitment, is also payable and is similarly dependent on credit ratings.

Yes, the agreement imposes customary covenants similar to Dover's previous credit facility. These include restrictions on the company and its subsidiaries granting liens on assets, engaging in certain consolidations, mergers, or asset sales. Additionally, Dover must maintain a minimum interest coverage ratio of 3.00:1.00 (EBITDA to consolidated net interest expense).