Summary
This 8-K filing by Tyco International Ltd. (not Johnson Controls International plc as stated in the prompt) on March 28, 2011, announces the entry into a new $750 million Four-Year Senior Unsecured Credit Agreement. This new agreement effectively replaces and consolidates existing credit facilities. Investors should note that this action strengthens Tyco's liquidity position by establishing a larger, single credit line for general corporate purposes, including working capital and capital expenditures. The agreement terminates a previous three-year credit facility and reduces commitments under another five-year facility, ultimately resulting in Tyco having $1.5 billion in senior unsecured revolving credit lines available. The company did not draw down any funds at closing, indicating a proactive approach to maintaining financial flexibility. The new credit agreement includes customary covenants, such as a leverage ratio requirement of 3.5 to 1.0, and standard restrictions on granting liens, fundamental changes, and incurring additional debt.
Key Highlights
- 1Tyco International entered into a new $750 million Four-Year Senior Unsecured Credit Agreement.
- 2The new agreement consolidates and streamlines existing credit facilities.
- 3Total senior unsecured revolving credit lines available to Tyco now stand at $1.5 billion.
- 4No proceeds were drawn down at the closing of the new credit agreement, preserving liquidity.
- 5The credit facility is for general corporate purposes, including working capital and capital expenditures.
- 6The agreement includes a financial covenant requiring a leverage ratio of 3.5 to 1.0 (debt to EBITDA).
- 7Customary negative covenants are in place, limiting certain actions like granting liens and incurring additional debt.