Summary
Corning Incorporated (GLW) announced through its Chinese subsidiary, Corning Display Technologies (China) Co., Ltd. (CDTC), the entry into a significant Credit Agreement on June 30, 2011. This agreement allows CDTC to borrow up to RMB 4,000,000,000, primarily to finance the construction of a new liquid crystal display (LCD) production facility in Beijing, China. This facility is crucial for Corning's expansion in the vital Chinese market and highlights the company's commitment to growing its display technologies segment. The credit facility has an eighteen-month availability period, with repayment structured over several years following the first advance. Notably, Corning Incorporated provides an unconditional guarantee for CDTC's borrowings, indicating strong financial support and confidence in the subsidiary's venture. The agreement also includes customary covenants and financial ratio requirements for both CDTC and Corning, ensuring prudent financial management and operational stability throughout the financing period.
Key Highlights
- 1Corning's Chinese subsidiary, CDTC, secured a Credit Agreement for up to RMB 4 billion.
- 2Funds are designated to finance the construction of a new LCD production facility in Beijing, China.
- 3The credit facility has an eighteen-month availability period starting from June 30, 2011.
- 4Corning Incorporated provides an unconditional guarantee for the subsidiary's borrowings under the agreement.
- 5The agreement includes various affirmative and negative covenants, such as financial reporting and limitations on liens and indebtedness.
- 6Corning must maintain specific consolidated financial ratios: debt to capital (<= 0.50:1.00) and adjusted EBITDA to interest expense (>= 3.50:1.00).
- 7The credit agreement is set to terminate five years after the first advance.