8-KMaterial AgreementsFinancial EventsExhibits & Filings

ELECTRONIC ARTS INC. 8-K Report, Material Agreement (Aug 29, 2019)

Filed August 29, 2019For Securities:EA

Summary

Electronic Arts Inc. (EA) announced on August 29, 2019, the entry into a new $500 million unsecured committed revolving credit facility, replacing its prior facility which was set to expire in March 2020. This new facility, with a maturity date of August 29, 2024, provides EA with significant financial flexibility for general corporate purposes. The agreement includes options for extending the maturity and increasing the credit line by an additional $500 million, signaling a proactive approach to managing its capital structure and potential future needs. Key terms of the new credit facility include interest rates based on the company's debt credit ratings, with options for either a base rate or adjusted LIBOR rate. EA is also subject to customary covenants, including maintaining a specific debt-to-EBITDA ratio, and standard events of default. The termination of the previous credit facility was concurrent with the execution of the new agreement, ensuring uninterrupted access to liquidity. The involvement of major financial institutions as joint bookrunners and lead arrangers underscores the robustness of the new credit arrangement.

Key Highlights

  • 1EA entered into a new $500 million unsecured committed revolving credit facility on August 29, 2019.
  • 2The new facility replaces a prior $500 million credit line that was due to expire in March 2020.
  • 3The new credit facility matures on August 29, 2024, providing a five-year term.
  • 4The facility includes an option to increase commitments by up to an additional $500 million.
  • 5An extension option allows for a one-year term extension, exercisable up to two times.
  • 6Proceeds are available for general corporate purposes.
  • 7The credit agreement contains customary covenants and events of default, including a debt-to-EBITDA ratio requirement.

Frequently Asked Questions

The new $500 million revolving credit facility is primarily for general corporate purposes, providing Electronic Arts Inc. (EA) with financial flexibility to manage its operations, investments, or other strategic initiatives.

The new facility is essentially a replacement for the prior $500 million revolving credit facility. It offers a longer maturity (five years versus the remaining term of the old one) and includes options for increasing the credit line and extending the maturity, suggesting an enhancement of EA's liquidity management strategy.

Yes, the credit agreement includes customary covenants that limit or restrict certain actions by EA and its subsidiaries, such as incurring additional subsidiary indebtedness or disposing of assets. EA is also required to maintain compliance with a debt-to-EBITDA ratio. Standard events of default are also outlined, which, if triggered, could lead to acceleration of obligations.

No, according to the filing, no loans were made under the new Credit Agreement on the Closing Date of August 29, 2019. Similarly, no amounts were drawn under the prior credit facility before its termination.