Summary
MasterCard Incorporated announced on November 22, 2010, the establishment of a new, larger three-year unsecured revolving credit facility totaling $2.75 billion. This new facility, which matures on November 22, 2013, replaces the company's previous $2.0 billion credit line. The primary purpose of this facility is for general corporate needs, providing flexibility and financial resources for the company's operations. This move indicates a proactive approach by MasterCard to ensure robust liquidity and financial management. The increased credit capacity offers enhanced operational flexibility and a stronger financial footing. Investors should note that the credit facility includes standard financial covenants, such as a maximum consolidated leverage ratio of 3.50 to 1.00, and various restrictive covenants common to such agreements, designed to safeguard lenders' interests while providing the company with necessary borrowing power.
Key Highlights
- 1MasterCard secured a new $2.75 billion three-year unsecured revolving credit facility, replacing a prior $2.0 billion facility.
- 2The new Credit Facility expires on November 22, 2013.
- 3Borrowings under the facility are available for general corporate purposes.
- 4Interest rates are tied to LIBOR or an alternative base rate plus applicable margins, which fluctuate based on MasterCard's credit rating.
- 5The agreement includes a financial covenant requiring a maximum consolidated leverage ratio of 3.50 to 1.00.
- 6Restrictive covenants limit the company's ability to create liens, dispose of assets, engage in affiliate transactions, and change its primary business.
- 7A significant portion of the lenders are affiliated with MasterCard's principal operating subsidiary, reinforcing existing relationships.