8-KMaterial AgreementsFinancial EventsExhibits & Filings

Edwards Lifesciences Corp 8-K Report, Material Agreement (Jul 24, 2014)

Filed July 24, 2014For Securities:EW

Summary

Edwards Lifesciences Corporation (EW) filed an 8-K on July 24, 2014, reporting the entry into a new material definitive agreement and the termination of a previous one. Specifically, on July 18, 2014, the company entered into a Five-Year Credit Agreement to establish a $750 million multi-currency unsecured revolving credit facility, which replaces their prior $750 million unsecured revolving credit facility under a 2011 agreement. This new credit facility offers increased flexibility with a five-year term and the option to expand the facility by an additional $250 million. Borrowings will bear variable interest rates based on LIBOR or a base rate, plus an applicable margin tied to the company's leverage ratio. The company intends to use these funds for general corporate purposes. The agreement includes standard covenants and financial ratio requirements, with potential consequences for default.

Key Highlights

  • 1Entered into a new five-year, $750 million unsecured revolving credit facility on July 18, 2014.
  • 2Replaced a previous four-year, $750 million unsecured revolving credit facility dated July 29, 2011.
  • 3The new credit facility allows for potential increases of up to an additional $250 million.
  • 4Interest rates are variable, based on LIBOR or base rate, plus a leverage-ratio-dependent margin.
  • 5Funds are designated for general corporate purposes.
  • 6The agreement includes customary representations, warranties, covenants, and events of default.
  • 7Key financial covenants include limitations on liens, debt incurrence, mergers, asset dispositions, and adherence to leverage and interest coverage ratios.

Frequently Asked Questions

The primary purpose of this 8-K filing is to report the entry into a new material definitive agreement, specifically a five-year credit facility, and the termination of a previous credit agreement.

The new credit facility is a $750 million, multi-currency, unsecured revolving credit facility with a five-year term. It allows for borrowings and letters of credit, with a potential to increase the facility size by an additional $250 million. Interest rates are variable, linked to LIBOR or a base rate, plus a margin based on the company's leverage ratio. It replaces a similar $750 million facility that was set to mature earlier.

The new credit agreement provides Edwards Lifesciences with continued access to significant funding for general corporate purposes for an extended period (five years) and offers flexibility to potentially increase borrowing capacity. The covenants and financial ratio requirements mean the company must maintain certain financial health metrics to avoid default.

Edwards Lifesciences terminated the 2011 Credit Agreement because they entered into the new, more favorable Five-Year Credit Agreement, which establishes a new credit facility designed to replace the existing one. This is a common practice when companies secure better terms or longer maturities for their debt obligations.