Summary
This 8-K/A filing by Howmet Aerospace Inc. (formerly Arconic Inc.) serves as an amendment to a previous filing, primarily to correct a typographical error regarding a financial covenant. The core of the filing details a third amendment to the company's Five-Year Revolving Credit Agreement, effective upon a "2020 Separation Transaction." This amendment significantly modifies the credit agreement by lowering the total commitment from $3 billion to $1.5 billion and setting a new financial covenant requiring the ratio of Consolidated Net Debt to Consolidated EBITDA to be no greater than 3.50 to 1.00. Additionally, the company announced its intention to redeem all outstanding $1 billion of its 6.150% Notes due 2020 and $300 million of its 5.40% Notes due 2021, with a redemption date set for April 6, 2020. The redemption price for these notes will be determined based on either 100% of the principal plus accrued interest or a calculation involving present values discounted at Treasury rates plus a specified spread. These actions signal a significant restructuring of the company's debt and credit facilities, likely in anticipation of or as part of the announced separation transaction.
Key Highlights
- 1Amendment to Revolving Credit Agreement finalized on March 4, 2020, effective upon the "2020 Separation Transaction".
- 2Total Commitment under the Credit Agreement is reduced by 50% from $3,000,000,000 to $1,500,000,000.
- 3New financial covenant set: Consolidated Net Debt to Consolidated EBITDA ratio must be no greater than 3.50 to 1.00.
- 4The maturity date of the Credit Agreement is now the fifth anniversary of the "2020 Separation Transaction Effective Date".
- 5Company will redeem $1,000,000,000 of 6.150% Notes due 2020.
- 6Company will redeem $300,000,000 of 5.40% Notes due 2021.
- 7Redemption of notes is scheduled for April 6, 2020.