Summary
Howmet Aerospace Inc. (then Arconic Inc.) filed an 8-K on July 2, 2018, to report the execution of Amendment No. 2 to its Five-Year Revolving Credit Agreement. This amendment restates the existing credit agreement, which provides a $3 billion senior unsecured revolving credit facility. The facility's primary purpose is for working capital and general corporate purposes. The amendment extends the maturity date to June 29, 2023, with provisions for two one-year extensions subject to lender consent. This action demonstrates the company's proactive management of its liquidity and financial flexibility.
Key Highlights
- 1Restatement of the existing credit agreement through Amendment No. 2, dated June 29, 2018.
- 2Maintains a $3 billion senior unsecured revolving credit facility for working capital and general corporate purposes.
- 3Extended maturity date to June 29, 2023, with options for two one-year extensions.
- 4The credit facility is unsecured and ranks pari passu with other unsecured, unsubordinated debt.
- 5Borrowings can be in U.S. dollars or Euros, with interest rates tied to base rate or LIBOR plus an applicable margin based on credit ratings.
- 6Key covenants include limitations on liens, mergers, changes in business nature, and a maximum Consolidated Net Debt to Consolidated EBITDA ratio that steps down over time.
- 7Events of Default, triggering acceleration, include non-payment, breaches of representations/covenants, defaults on other significant indebtedness, bankruptcy, and change of control.
Frequently Asked Questions
This 8-K filing is primarily to report the execution of Amendment No. 2 to Howmet Aerospace Inc.'s (then Arconic Inc.) Five-Year Revolving Credit Agreement. This amendment restates the agreement and impacts the terms of its $3 billion credit facility.
The amended credit facility provides $3 billion in revolving credit, matures on June 29, 2023 (with extension options), is unsecured, and can be used for working capital or general corporate purposes. Interest rates are variable, based on LIBOR or a base rate plus an applicable margin.
The credit agreement includes covenants that limit the company's ability to incur liens, engage in mergers or asset sales, or change its business nature. Crucially, it imposes a maximum ratio of Consolidated Net Debt to Consolidated EBITDA, which tightens over time, indicating a commitment to managing leverage.
The credit facility matures on June 29, 2023. The company has the option to request two one-year extensions, subject to obtaining consent from the lenders as outlined in the credit agreement.