Summary
Intuit Inc. (INTU) announced on February 1, 2016, the execution of a new five-year Credit Agreement, establishing a $1.5 billion credit facility. This facility replaces their previous $500 million agreement, significantly increasing their borrowing capacity. The new facility comprises a $500 million unsecured Term Loan and a $1 billion unsecured revolving credit facility, both maturing on February 1, 2021, with options for extension and incremental increases up to $750 million. This expanded credit line provides Intuit with greater financial flexibility for general corporate purposes, including strategic initiatives like share repurchases and potential future acquisitions. The company has already drawn $750 million under this new facility. The agreement includes customary covenants and events of default, with specific financial maintenance requirements such as a debt-to-EBITDA ratio not exceeding 3.25 to 1.00.
Key Highlights
- 1Intuit entered into a new $1.5 billion five-year credit facility, replacing a previous $500 million agreement.
- 2The new facility includes a $500 million unsecured Term Loan and a $1 billion unsecured revolving credit facility.
- 3The credit facility matures on February 1, 2021, with provisions for extensions and up to $750 million in incremental increases.
- 4Borrowed funds are designated for general corporate purposes, including share repurchases and acquisitions.
- 5Intuit has already borrowed $750 million under the new facility as of February 1, 2016.
- 6The agreement includes covenants such as maintaining a consolidated debt to consolidated annual EBITDA ratio of not greater than 3.25 to 1.00.
- 7Interest rates are based on the alternate base rate or LIBOR, plus an applicable margin that varies with Intuit's senior debt credit ratings.