8-KMaterial AgreementsFinancial EventsExhibits & Filings

LOWES COMPANIES INC 8-K Report, Material Agreement (Sep 12, 2019)

Filed September 12, 2019For Securities:LOW

Summary

Lowe's Companies Inc. (LOW) has filed an 8-K report detailing the entry into a $250 million unsecured 364-day credit agreement on September 9, 2019. This agreement provides Lowe's with flexible short-term financing options, denominated in multiple currencies, with a maturity date of September 8, 2020. The company has the option to convert outstanding loans into a term loan, repayable one year later, subject to certain conditions and fees. This new credit facility offers important liquidity and operational flexibility. The interest rates are tied to the company's credit ratings, with margins on Base Rate Loans ranging from 0.000% to 0.15% and on Eurocurrency Rate Loans from 0.720% to 1.15%. Additionally, a facility fee of 0.030% to 0.100% per annum on aggregate commitments is payable. The agreement includes customary covenants, such as a financial ratio requirement for Consolidated Adjusted Funded Debt to Consolidated EBITDAR not to exceed 4.00 to 1.00, and standard events of default, including cross-default and change of control provisions. As of the filing date, there were no outstanding borrowings under this agreement.

Key Highlights

  • 1Lowe's entered into a new $250 million unsecured 364-day credit agreement on September 9, 2019.
  • 2The credit agreement matures on September 8, 2020, with an option to convert to a one-year term loan.
  • 3Borrowings can be denominated in USD, EUR, Sterling, CAD, and other approved currencies.
  • 4Interest rates vary based on credit ratings, with applicable margins on Base Rate Loans from 0.000% to 0.15% and Eurocurrency Rate Loans from 0.720% to 1.15%.
  • 5A facility fee of 0.030% to 0.100% per annum on aggregate commitments is payable, regardless of borrowings.
  • 6A key financial covenant requires Consolidated Adjusted Funded Debt to Consolidated EBITDAR to not exceed 4.00 to 1.00.
  • 7The agreement includes standard provisions for events of default, such as cross-default and change of control.

Frequently Asked Questions

The primary purpose of this $250 million unsecured 364-day credit agreement is to provide Lowe's with flexible short-term financing and enhance liquidity. It offers borrowing capacity that can be used for various corporate purposes, including working capital needs, and allows for repayment flexibility with an option to convert to a term loan.

The most significant financial covenant is the requirement to maintain a ratio of Consolidated Adjusted Funded Debt to Consolidated EBITDAR that does not exceed 4.00 to 1.00 at the end of each fiscal quarter. This covenant ensures the company maintains a healthy balance sheet and debt servicing capability.

There are two main costs: interest on borrowings and a facility fee. Interest rates depend on the type of borrowing (Base Rate or Eurocurrency Rate) and Lowe's credit rating, with applicable margins ranging from 0.000% to 1.15%. A facility fee, ranging from 0.030% to 0.100% per annum on the total commitment, is payable regardless of whether any funds are drawn.

No, as of the date of the filing (September 11, 2019), there were no outstanding borrowings under the 364-day credit agreement.