8-KMaterial Agreements

Mastercard Inc 8-K Report, Material Agreement (Nov 15, 2019)

Filed November 15, 2019For Securities:MA

Summary

Mastercard Inc. (MA) announced on November 14, 2019, the establishment of a new, committed five-year unsecured revolving credit facility totaling $6,000,000,000. This new facility replaces and increases the Company's prior $4,500,000,000 credit line, extending its maturity to November 14, 2024. The expanded credit capacity is available for general corporate purposes in U.S. dollars and Euros. This significant increase in available liquidity demonstrates Mastercard's strong financial standing and provides ample flexibility for strategic initiatives, potential acquisitions, or managing working capital needs. The credit facility's terms include customary covenants, events of default, and options for early prepayment without penalty, offering operational flexibility. Notably, many of the lenders are also customers or affiliates of customers, indicating established banking relationships.

Key Highlights

  • 1Mastercard entered into a new $6 billion unsecured revolving credit facility, increasing its borrowing capacity from the previous $4.5 billion.
  • 2The new credit facility has a five-year term, expiring on November 14, 2024.
  • 3The funds are available for general corporate purposes and can be drawn in U.S. dollars and/or Euros.
  • 4Interest rates are based on LIBOR or an alternative base rate plus a margin that varies with Mastercard's credit rating.
  • 5The agreement includes restrictive covenants, with customary exceptions, limiting actions such as creating liens, fundamental corporate changes, asset disposals outside the ordinary course, and affiliate transactions.
  • 6Mastercard has the option to prepay, terminate, or reduce commitments under the facility at any time without penalty.
  • 7Many lenders in the facility are existing customers or affiliates of customers, highlighting strong banking partnerships.

Frequently Asked Questions

The increase from $4.5 billion to $6 billion provides Mastercard with greater financial flexibility for general corporate purposes. This could include supporting strategic growth initiatives, potential acquisitions, managing operational cash flows, or simply strengthening its liquidity position.

The facility is a $6 billion unsecured revolving line of credit with a five-year term ending November 14, 2024. It bears interest based on LIBOR or an alternative rate plus a performance-based margin, and it includes customary covenants, events of default, and allows for penalty-free prepayment.

Yes, the agreement contains restrictive covenants that limit Mastercard's ability to, among other things, incur significant liens, undergo fundamental corporate changes like mergers or sales of substantially all assets, dispose of significant assets outside the ordinary course of business, or engage in non-arm's-length affiliate transactions. However, these covenants generally include customary exceptions.

No, an increase in an unsecured revolving credit facility is typically a sign of proactive financial management and a desire to maintain strong liquidity and flexibility. It indicates the company is well-positioned to access capital if needed and does not necessarily signal distress.