Summary
Lockheed Martin Corporation (LMT) has announced the entry into a new Five-Year Credit Agreement, effective August 24, 2018. This agreement establishes a $2.5 billion unsecured revolving credit facility, with an option to increase commitments by an additional $500 million, totaling up to $3.0 billion. This new facility is designed to support general corporate purposes, including commercial paper borrowings, and replaces a previous credit agreement scheduled to mature in October 2022. The new credit facility matures on August 24, 2023, and offers flexibility with options for renewal. Interest rates are variable, based on either a "Base Rate" or a "Eurodollar Rate" (tied to LIBOR), with margins dependent on LMT's credit ratings. A facility fee will also be applied quarterly. The agreement includes standard covenants, such as restrictions on asset encumbrance and mergers, and a key leverage ratio covenant limiting Debt to 65% of Debt plus Stockholders' Equity, with specific exclusions for certain accounting adjustments and debt types.
Key Highlights
- 1Lockheed Martin entered into a new $2.5 billion five-year unsecured revolving credit facility, effective August 24, 2018.
- 2The facility has an accordion feature allowing for an increase in commitments by up to $500 million, bringing the total potential to $3.0 billion.
- 3This new credit agreement replaces a prior five-year credit agreement that was terminated without outstanding borrowings or penalties.
- 4The facility matures on August 24, 2023, with provisions for potential one-year renewal extensions.
- 5Borrowings are unsecured and bear interest based on the Base Rate or Eurodollar Rate (LIBOR-based), with margins varying by LMT's credit ratings.
- 6The agreement includes customary covenants, notably a maximum leverage ratio of 65% (Debt to Debt + Equity), with specific adjustments for accounting treatments and certain debt components.
- 7No borrowings were made under the new credit facility at the time of its closing.