8-KMaterial AgreementsFinancial EventsExhibits & Filings

FEDEX CORP 8-K Report, Material Agreement (Apr 29, 2011)

Filed April 29, 2011For Securities:FDX

Summary

FedEx Corporation (FDX) has entered into a new $1 billion, five-year unsecured revolving credit facility, replacing its previous three-year agreement. This new credit facility, effective April 26, 2011, provides FedEx with access to funds for general corporate purposes, including supporting commercial paper and potential acquisitions. As of the filing date, no borrowings had been made under the new agreement. The terms of the new credit facility include interest rates tied to either the prime rate or LIBOR, plus an applicable margin that will fluctuate based on FedEx's credit ratings. Commitment fees are also payable on the undrawn portion of the facility. A key financial covenant requires FedEx to maintain a leverage ratio of adjusted debt to capital not exceeding 0.7 to 1.0, which is consistent with the previous agreement.

Key Highlights

  • 1FedEx secured a new $1 billion, five-year unsecured revolving credit facility.
  • 2The new credit agreement replaces a prior $1 billion, three-year agreement.
  • 3Funds from the facility can be used for general corporate purposes, including commercial paper back-up and acquisitions.
  • 4As of the filing date (April 29, 2011), no borrowings had been made under the new facility.
  • 5Interest rates are based on prime rate or LIBOR, plus an applicable margin tied to credit ratings.
  • 6A leverage ratio covenant (adjusted debt to capital not exceeding 0.7:1.0) remains consistent with the previous agreement.
  • 7The facility matures on April 26, 2016, with commitments terminating at that time unless earlier terminated.

Frequently Asked Questions

This filing announces FedEx Corporation's entry into a new $1 billion, five-year unsecured revolving credit agreement. It details the terms of this new facility, which replaces a previous agreement, and confirms its availability for general corporate purposes.

The new agreement provides up to $1 billion in revolving credit. Interest rates are variable, based on either the prime rate or adjusted LIBOR, plus an applicable margin. FedEx also pays commitment fees on the undrawn amount. A critical financial covenant requires maintaining a leverage ratio of adjusted debt to capital not exceeding 0.7 to 1.0.

Not necessarily. The filing states that no borrowings had been made under the new agreement as of April 29, 2011. This facility provides flexibility for general corporate purposes, commercial paper back-up, and acquisitions, suggesting it is a proactive measure to ensure liquidity and financial flexibility rather than a response to an immediate crisis.

The new credit agreement is an unsecured revolving facility, meaning it is a source of available funds rather than new long-term debt unless drawn upon. FedEx's obligations under this new agreement are guaranteed by the same subsidiaries that guarantee its existing public debt securities, indicating no change in the guarantee structure for its debt.