Summary
Lockheed Martin Corporation (LMT) filed an 8-K on September 1, 2011, detailing the termination of its previous $1.5 billion revolving credit agreement and the establishment of a new, similar facility. The new agreement, effective August 26, 2011, also provides $1.5 billion in revolving credit, maturing in five years with options for annual renewals. This facility includes a sublimit for letters of credit and offers flexible interest rate options, including a base rate, Eurodollar rate, or competitive bid rates. The company also has the option to increase the facility by up to an additional $500 million, bringing the total to $2 billion, subject to lender approval. The new credit agreement includes standard covenants such as restrictions on liens and mergers, and importantly, a leverage ratio covenant requiring the company to maintain a debt-to-total capitalization ratio below 65%. The termination of the prior agreement occurred without outstanding borrowings or termination penalties.
Key Highlights
- 1Lockheed Martin terminated its existing $1.5 billion revolving credit agreement and entered into a new $1.5 billion five-year unsecured revolving credit facility.
- 2The new credit agreement matures on August 26, 2016, with potential for one-year renewal periods.
- 3A sublimit of $300 million is available for the issuance of letters of credit.
- 4The company has the option to request an increase in the facility by up to $500 million, potentially raising the total to $2 billion.
- 5Interest rates on borrowings can be based on the Base Rate, Eurodollar Rate, or a competitive bid process.
- 6The agreement includes a covenant requiring Lockheed Martin to maintain a leverage ratio below 65%.
- 7The prior credit agreement was terminated without any outstanding borrowings, letters of credit, or termination penalties.