8-KMaterial AgreementsFinancial EventsExhibits & Filings

HONEYWELL INTERNATIONAL INC 8-K Report, Material Agreement (Apr 28, 2017)

Filed April 28, 2017For Securities:HONHONIV

Summary

Honeywell International Inc. (HON) filed an 8-K on April 28, 2017, detailing two significant financing events. First, the company entered into a new $1.5 billion 364-Day Credit Agreement for general corporate purposes, with a maturity date of April 27, 2018. Importantly, this agreement does not include financial covenants or restrict dividend payments, offering flexibility for the company's operations and shareholder returns. It does, however, contain standard events of default and provisions that could terminate commitments under specific change-of-control scenarios. Second, Honeywell amended its existing Five Year Credit Agreement, extending its termination date from July 10, 2021, to April 28, 2022. This extension of its longer-term credit facility provides continued access to funding and demonstrates proactive capital management. Both actions suggest Honeywell is maintaining a strong liquidity position and managing its debt structure effectively to support its ongoing business needs and strategic initiatives.

Key Highlights

  • 1Entered into a new $1.5 billion 364-Day Credit Agreement for general corporate purposes, maturing April 27, 2018.
  • 2The 364-Day Credit Agreement does not contain financial covenants, providing operational flexibility.
  • 3The 364-Day Credit Agreement does not restrict Honeywell's ability to pay dividends.
  • 4Amendment No. 3 to the Five Year Credit Agreement extends its termination date from July 10, 2021, to April 28, 2022.
  • 5The new credit agreement has conditions for lender termination, including change-of-control events (e.g., 30% beneficial ownership acquisition).
  • 6Interest rates on the 364-Day Credit Agreement are based on the Base Rate or Eurocurrency Rate plus an Applicable Margin determined by credit default swap spreads and debt ratings.

Frequently Asked Questions

The $1.5 billion 364-Day Credit Agreement is intended for general corporate purposes. This means the funds can be used for various operational needs, working capital, or other general business activities as determined by the company.

No, the 364-Day Credit Agreement explicitly states that it does not restrict Honeywell's ability to pay dividends and does not contain any financial covenants. This provides significant flexibility for the company's financial management and capital allocation decisions.

While the agreement is for general corporate purposes and lacks financial covenants, lenders can terminate commitments under specific circumstances. These include the acquisition of 30% or more of Honeywell's voting stock by any person or group, or a change in the board of directors composition exceeding certain thresholds within a 12-month period without board approval. Standard events of default like non-payment, covenant breaches, cross-defaults, or insolvency would also prevent further borrowings and trigger repayment obligations.

Extending the termination date of the Five Year Credit Agreement from July 10, 2021, to April 28, 2022, demonstrates Honeywell's proactive approach to managing its long-term debt structure. It ensures continued access to this credit facility for a longer period, providing financial stability and supporting the company's ongoing strategic and operational needs.