Summary
Honeywell International Inc. (HON) filed an 8-K report on May 17, 2007, detailing a significant update to its credit facilities. The company entered into a $2.8 billion Amended and Restated Five Year Credit Agreement, replacing a prior $2.3 billion agreement. This new facility, which can be increased up to $3.5 billion, is primarily for general corporate purposes and to support commercial paper issuance. A notable feature is a $700 million sub-limit for letters of credit, with approximately $109 million from the prior agreement being carried over. Importantly, the Credit Agreement does not impose restrictions on Honeywell's ability to pay dividends and crucially, it does not contain any financial covenants. The agreement outlines standard conditions for borrowing and events of default, such as non-payment, covenant breaches, cross-defaults, bankruptcy, and ERISA obligations. Additionally, lender commitments can be terminated if there's a change in control event, specifically the acquisition of 30% or more of the company's voting stock or a significant shift in board composition. The terms and fees are subject to Honeywell's long-term debt ratings but are not tied to a Material Adverse Change or a downgrade in credit ratings.
Key Highlights
- 1Honeywell entered into a $2.8 billion Amended and Restated Five Year Credit Agreement, effective May 14, 2007.
- 2The new credit facility can be increased to a total of $3.5 billion.
- 3The agreement is primarily for general corporate purposes and to support commercial paper issuance.
- 4A $700 million sub-limit is available for the issuance of letters of credit.
- 5The credit agreement does not contain financial covenants, offering flexibility to the company.
- 6Dividend payments are not restricted by the terms of this credit agreement.
- 7Key events of default include non-payment, covenant breaches, bankruptcy, and change of control triggers.