Summary
Johnson Controls International plc (JCI) has entered into two new credit agreements, a $2.5 billion 5-year revolving credit facility and a $500 million 364-day revolving credit facility, both maturing with JPMorgan Chase Bank, N.A. These new agreements replace the company's prior 5-year credit facility. The purpose of these agreements is to provide general business financing and letters of credit, offering flexibility with options like converting the 364-day facility into term loans.
Key Highlights
- 1JCI secured a new $2.5 billion 5-year revolving credit agreement, maturing in December 2024.
- 2A separate $500 million 364-day revolving credit agreement was also established, maturing in December 2020.
- 3The new credit facilities replace the company's previous $2.0 billion 5-year credit agreement.
- 4Borrowings will bear interest based on LIBOR or Base Rate plus an applicable margin tied to JCI's credit rating.
- 5A sustainability-linked component is included, where interest and facility fees can be adjusted based on performance in workplace safety and greenhouse gas emissions targets.
- 6The credit agreements require JCI to maintain consolidated shareholders' equity of at least $3.5 billion.
- 7The new facilities are unsecured and will be used for general business purposes.
Frequently Asked Questions
Johnson Controls has established a total borrowing capacity of $3.0 billion through the new credit agreements, comprising a $2.5 billion 5-year revolving credit facility and a $500 million 364-day revolving credit facility.
The new 5-year credit agreement has a larger principal amount ($2.5 billion vs. $2.0 billion) and replaces the company's prior 5-year credit agreement. The 364-day facility provides additional, shorter-term flexibility.
The inclusion of sustainability targets means that Johnson Controls' borrowing costs (interest rates and facility fees) can be adjusted, either up or down, based on the company's achievement of specific goals related to workplace safety and greenhouse gas emissions. This aligns financial incentives with environmental, social, and governance (ESG) performance.
The Term-Out Option allows Johnson Controls, under certain conditions, to convert outstanding revolving loans under the 364-day credit facility into term loans that would mature one year after the 364-day facility's commitment termination date (December 3, 2020). This provides flexibility in managing its debt maturity profile.