Summary
Tyco International Ltd. (the "Company") has filed an 8-K report detailing the entry into a new $500 million senior unsecured revolving credit agreement, dated June 24, 2008. This agreement, with a three-year term, is with Citibank, N.A. as the administrative agent and various lenders. The funds are intended for working capital, capital expenditures, and other general corporate purposes. This new credit facility, combined with an existing $1.25 billion facility, increases the Company's total revolving credit commitments to $1.75 billion, enhancing its liquidity and financial flexibility. The agreement includes provisions for interest at LIBOR or an alternate base rate, commitment fees, and allows for voluntary prepayments without penalty under certain conditions. It also contains customary covenants, including a financial covenant requiring the maintenance of a 3.5 to 1.0 leverage ratio (consolidated total debt to consolidated EBITDA), and various negative covenants restricting certain corporate actions. In conjunction with this new agreement, Tyco also executed an amendment to its existing five-year senior revolving credit agreement. This amendment primarily serves to align the terms of the existing agreement with the new credit facility, ensuring consistency in the Company's borrowing arrangements. Investors should note that the covenants and default provisions are standard for such agreements, indicating a typical approach to corporate financing. The overall impact for investors is an affirmation of the company's access to significant credit lines, supporting its operational needs and strategic initiatives.
Key Highlights
- 1Tyco International entered into a new $500 million senior unsecured revolving credit agreement effective June 24, 2008.
- 2The new credit facility has a three-year term and is guaranteed by the Company.
- 3This new agreement, along with an existing credit line, raises Tyco's total committed revolving credit facilities to $1.75 billion.
- 4Borrowings can be made in U.S. dollars for working capital, capital expenditures, and other corporate purposes.
- 5Interest rates are based on LIBOR plus a margin or an alternate base rate.
- 6The credit agreement includes a financial covenant requiring a leverage ratio of no more than 3.5 to 1.0.
- 7An amendment was also executed to align the terms of an existing credit agreement with the new facility.