8-KMaterial AgreementsFinancial Events

FEDEX CORP 8-K Report, Material Agreement (Mar 27, 2019)

Filed March 27, 2019For Securities:FDX

Summary

FedEx Corporation has entered into new credit agreements to enhance its financial flexibility. On March 22, 2019, the company secured a $2.0 billion five-year revolving credit facility and a $1.5 billion 364-day revolving credit facility. These new agreements replace a previous $2.0 billion facility and provide FedEx with substantial borrowing capacity for general corporate purposes, including potential acquisitions. The company has the option to increase the five-year facility to $2.5 billion, indicating a strategic move to bolster its liquidity and support future growth initiatives. These new credit facilities are unsecured and multi-currency, offering flexibility in managing international operations. Interest rates will be based on prevailing market rates, such as prime rates or LIBOR, plus applicable margins that vary with FedEx's credit ratings. The agreements include customary covenants, with a key financial requirement to maintain a debt-to-EBITDA ratio not exceeding 3.5 to 1.0. This refinancing demonstrates FedEx's proactive approach to managing its capital structure and ensuring adequate resources are available to execute its business strategy.

Key Highlights

  • 1FedEx entered into new credit agreements totaling $3.5 billion: a $2.0 billion five-year facility and a $1.5 billion 364-day facility.
  • 2These new credit agreements replaced a prior $2.0 billion five-year credit agreement terminated on March 22, 2019.
  • 3The new facilities are unsecured, multi-currency revolving credit facilities, providing significant financial flexibility.
  • 4FedEx has the option to increase the aggregate amount under the five-year credit facility to up to $2.5 billion.
  • 5Proceeds from these agreements can be used for general corporate purposes, including acquisitions.
  • 6Borrowings are subject to interest rates based on prime rates or LIBOR plus applicable margins, which are tied to FedEx's credit ratings.
  • 7A key financial covenant requires FedEx to maintain a consolidated total debt to consolidated EBITDA ratio not exceeding 3.5 to 1.0.

Frequently Asked Questions

The primary purpose of these new credit agreements is to enhance FedEx's financial flexibility and provide liquidity for general corporate purposes, including potential acquisitions. They replace an existing credit facility and ensure the company has access to substantial borrowing capacity.

FedEx has secured a total of $3.5 billion through these new credit agreements, comprising a $2.0 billion five-year revolving credit facility and a $1.5 billion 364-day revolving credit facility.

The new credit facilities are unsecured. This means FedEx is not pledging specific assets as collateral for these borrowings.

A key financial covenant requires FedEx to maintain a ratio of consolidated total debt to consolidated EBITDA that does not exceed 3.5 to 1.0 at the end of each fiscal quarter.