Summary
L3Harris Technologies, Inc. (formerly Harris Corporation) filed an 8-K on July 8, 2015, to report the establishment of a new $1 billion, five-year senior unsecured revolving credit facility, effective July 1, 2015. This new facility replaces a previous $1 billion credit agreement set to mature in 2017. Notably, no outstanding loans or letters of credit were tied to the terminated agreement, and no early termination penalties were incurred. The new credit facility provides significant financial flexibility, allowing for borrowings in multiple currencies (USD, EUR, GBP) with an option to increase the facility size by up to an additional $500 million, bringing the total potential to $1.5 billion. The credit agreement includes provisions for its use in working capital, general corporate purposes, refinancing existing debt, and repaying commercial paper. It also allows for designated subsidiaries to act as borrowers, with Harris providing guarantees. The terms include variable interest rates based on LIBOR or a base rate, plus applicable margins tied to the company's senior debt ratings, as well as unused commitment fees. Covenants and events of default are standard for such agreements, with a key financial covenant related to the ratio of consolidated total indebtedness to total capital.
Key Highlights
- 1Harris Corporation established a new $1 billion, five-year senior unsecured revolving credit facility on July 1, 2015.
- 2This new facility replaces a prior $1 billion credit agreement with no outstanding balances or early termination penalties.
- 3The new credit facility offers flexibility for borrowings in USD, EUR, and GBP, with a sub-limit for non-U.S. currencies.
- 4An accordion feature allows for a potential increase in the credit facility size by up to $500 million, to a total of $1.5 billion.
- 5Proceeds from the facility can be used for working capital, general corporate purposes, debt refinancing, and commercial paper repayment.
- 6Interest rates are variable, linked to LIBOR or a base rate, with margins that adjust based on Harris's senior debt ratings.
- 7A key financial covenant limits consolidated total indebtedness to total capital, with ratios of 0.675:1.00 until February 29, 2016, and 0.65:1.00 thereafter.