What new credit facilities did Humana enter into on May 31, 2024?

Humana entered into a new 364-day unsecured revolving credit agreement with $2,107,812,500 in commitments, which replaces a $1.5 billion 364-day facility that expired. It also entered into a first amendment to its existing five-year unsecured revolving credit agreement, increasing commitments from $2.5 billion to $2,642,187,500.

How much of the revolving credit capacity was available as of May 31, 2024?

Humana had no borrowings outstanding under the revolving credit agreements. Approximately $18.1 million of letters of credit were issued and undrawn under the five-year agreement, leaving approximately $2.624 billion of remaining capacity under that facility and approximately $2.11 billion under the 364-day agreement.

How will Humana use borrowings under these facilities?

The filing states that any borrowings under the revolving credit agreements will be used for general corporate purposes.

What are the key terms and costs of the revolving credit agreements?

Loans bear interest at Term SOFR or the base rate plus a spread. Humana pays an annual facility fee under each agreement regardless of utilization. The agreements include a maximum debt-to-capitalization financial covenant, customary events of default, and permit up to $500 million of incremental commitments.

Does Humana have other relationships with the lenders?

Yes. The filing states that Humana has other relationships, including financial advisory and banking, with some of the parties to the Revolving Credit Agreements.

HUM 8-K: Material Agreements & Financial Events

01—Abstract

Summary

Summary of the 8-K filed June 5, 2024. Cited figures are marked; the original filing is the authoritative source.

On May 31, 2024, Humana Inc. entered into a new 364-day unsecured revolving credit agreement with a total commitment of $2,107,812,500^a (about $2.11 billion).

It replaces a 364-day, $1.5 billion^b facility dated June 2, 2023 that expired under its terms. The company also entered into a first amendment to its existing five-year unsecured revolving credit agreement, which increases the commitments under that facility from $2.5 billion to $2,642,187,500 (about $2.64 billion). Borrowings under both facilities may be used for general corporate purposes, and the agreements permit up to $500 million of incremental commitments that Humana may allocate between the two facilities.

The revolving facilities bear interest at Term SOFR or the base rate plus a spread, and Humana will pay an annual facility fee under each agreement regardless of utilization. The agreements contain customary covenants, including a maximum debt-to-capitalization financial condition covenant, along with customary events of default, conditions of borrowing, and representations and warranties. Humana has other financial advisory and banking relationships with some of the parties to the agreements.

As of May 31, 2024, Humana had no borrowings outstanding under the revolving credit agreements and approximately $18.1 million^c of issued but undrawn letters of credit under the five-year facility. This leaves approximately $2.624 billion of remaining borrowing capacity under the five-year agreement and approximately $2.11 billion under the 364-day agreement. The filing incorporates these agreements as Exhibits 10.1 and 10.2.

02—Key points

Key Highlights

Humana entered into a new 364-day unsecured revolving credit agreement with $2,107,812,500 in commitments (about $2.11 billion), replacing a $1.5 billion 364-day facility dated June 2, 2023 that expired.
The existing five-year unsecured revolving credit agreement was amended to increase commitments from $2.5 billion to $2,642,187,500 (about $2.64 billion).
Both facilities permit up to $500 million of incremental commitments, allocable between the five-year and 364-day agreements at Humana's election.
Loans bear interest at Term SOFR or the base rate plus a spread, and Humana pays an annual facility fee under each agreement regardless of utilization.
As of May 31, 2024, there were no borrowings outstanding; approximately $18.1 million of undrawn letters of credit were issued under the five-year facility.
Remaining borrowing capacity was approximately $2.624 billion under the five-year agreement and approximately $2.11 billion under the 364-day agreement.
The agreements include a maximum debt-to-capitalization covenant and customary events of default; proceeds are for general corporate purposes.

03—Questions

Frequently Asked Questions

What new credit facilities did Humana enter into on May 31, 2024?
Humana entered into a new 364-day unsecured revolving credit agreement with $2,107,812,500 in commitments, which replaces a $1.5 billion 364-day facility that expired. It also entered into a first amendment to its existing five-year unsecured revolving credit agreement, increasing commitments from $2.5 billion to $2,642,187,500.
How much of the revolving credit capacity was available as of May 31, 2024?
Humana had no borrowings outstanding under the revolving credit agreements. Approximately $18.1 million of letters of credit were issued and undrawn under the five-year agreement, leaving approximately $2.624 billion of remaining capacity under that facility and approximately $2.11 billion under the 364-day agreement.
How will Humana use borrowings under these facilities?
The filing states that any borrowings under the revolving credit agreements will be used for general corporate purposes.
What are the key terms and costs of the revolving credit agreements?
Loans bear interest at Term SOFR or the base rate plus a spread. Humana pays an annual facility fee under each agreement regardless of utilization. The agreements include a maximum debt-to-capitalization financial covenant, customary events of default, and permit up to $500 million of incremental commitments.
Does Humana have other relationships with the lenders?
Yes. The filing states that Humana has other relationships, including financial advisory and banking, with some of the parties to the Revolving Credit Agreements.

04—Continue

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