What is the primary purpose of the new revolving credit agreement?

The new revolving credit agreement is primarily intended for working capital and general corporate purposes. It also serves to 'backstop' any commercial paper that L3Harris Technologies may issue, providing a reliable source of funding.

How does the new credit facility compare to the previous one?

The new five-year, $500 million facility is a significant increase from the prior $300 million four-year agreement. It also includes an option to expand the total commitments to $750 million, offering substantially more financial flexibility.

What are the key covenants and default provisions in the new agreement?

The agreement includes covenants related to financial ratios (total indebtedness to total capital not to exceed 0.60:1.00, and EBITDA to net interest expense not less than 3.00:1.00), as well as limitations on liens, mergers, asset sales, and certain investments. Events of default include payment defaults, breaches of covenants, material inaccuracies of representations, defaults on other indebtedness exceeding $50 million, unsatisfied judgments exceeding $50 million, certain ERISA liabilities exceeding $50 million, insolvency, and change of control.

What is the significance of the Commercial Paper Issuing and Paying Agent Agreement?

This agreement establishes Citibank, N.A. as the agent for L3Harris Technologies in issuing and paying commercial paper notes. Commercial paper represents short-term, unsecured debt. Having this agreement in place, alongside the increased revolving credit facility, strengthens the company's ability to manage its short-term funding needs efficiently.

LHX 8-K: Material Agreements & Financial Events

Summary

L3Harris Technologies, Inc. (formerly Harris Corporation) announced on March 31, 2005, the execution of a new five-year senior unsecured revolving credit agreement. This agreement significantly increases the company's borrowing capacity to $500 million, with an option to expand up to $750 million, replacing a previous $300 million facility. The new credit line is designated for working capital, general corporate purposes, and to backstop potential commercial paper issuances, providing enhanced financial flexibility. The company also entered into a Commercial Paper Issuing and Paying Agent Agreement with Citibank, N.A., to manage its commercial paper program. This move, along with the increased credit facility, indicates a proactive approach to managing liquidity and capital structure to support ongoing operations and potential future growth initiatives.

Key Highlights

1New five-year, $500 million senior unsecured revolving credit agreement entered into on March 31, 2005.
2The new credit facility can be expanded by an additional $250 million, potentially bringing the total to $750 million.
3This facility replaces a prior $300 million agreement, effectively doubling the available revolving credit.
4Funds can be used for working capital, general corporate purposes, and to backstop commercial paper issuance.
5Interest rates on borrowings are tied to LIBOR or a base rate, with margins that can adjust based on the company's senior unsecured long-term debt ratings.
6A new Commercial Paper Issuing and Paying Agent Agreement was established with Citibank, N.A. to manage commercial paper issuances.
7No borrowings were outstanding under the new credit agreement as of April 4, 2005.

L3HARRIS TECHNOLOGIES, INC. /DE/ 8-K Report, Material Agreement (Apr 5, 2005)

Summary

Key Highlights

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