8-KMaterial AgreementsFinancial EventsExhibits & Filings

MOODYS CORP /DE/ 8-K Report, Material Agreement (Aug 14, 2007)

Filed August 14, 2007For Securities:MCO

Summary

Moody's Corporation (MCO) filed an 8-K on August 14, 2007, reporting the entry into a material definitive agreement related to a new interim loan facility. This facility, totaling $500 million, was established on August 8, 2007, with JP Morgan Chase Bank, N.A., as the administrative agent, and several other major banks. The primary purpose of this report is to inform investors about this significant debt financing arrangement. The interim loan facility expires on February 8, 2008, with a deadline of November 5, 2007, for all borrowings. Moody's has already drawn $100 million under this facility. The interest rates are tied to LIBOR plus a variable premium, and the company also incurs quarterly facility fees. The agreement includes covenants that restrict certain corporate actions and mandates specific financial ratios (Interest Coverage Ratio and Earnings Coverage Ratio) that Moody's must maintain, indicating a focus on financial health and operational flexibility within the terms of the loan.

Key Highlights

  • 1Moody's Corporation entered into a $500 million interim loan facility on August 8, 2007.
  • 2The facility is provided by a syndicate of major banks, with JP Morgan Chase Bank as administrative agent.
  • 3The loan facility has an expiration date of February 8, 2008.
  • 4Moody's drew $100 million from the facility on August 13, 2007.
  • 5Interest rates are based on LIBOR plus a spread that varies with the company's Earnings Coverage Ratio.
  • 6The agreement includes financial covenants requiring specific Interest Coverage and Earnings Coverage Ratios.
  • 7Covenants also restrict certain corporate actions such as mergers, asset sales, and incurring additional liens without lender approval.

Frequently Asked Questions

The 8-K filing does not explicitly state the purpose of the $500 million interim loan facility. However, such facilities are typically used for general corporate purposes, short-term working capital needs, or to provide financial flexibility during a specific period.

The loan agreement requires Moody's to maintain an Interest Coverage Ratio of at least 3.0 to 1.0 and an Earnings Coverage Ratio of not more than 4.0 to 1.0. Additionally, it restricts the company and its subsidiaries from engaging in mergers, asset sales, affiliate transactions, sale-leaseback transactions, and incurring liens without lender approval.

The interim loan facility expires on February 8, 2008. All borrowings under this facility must be made by November 5, 2007.

The cost of borrowing includes interest payments based on LIBOR plus a premium ranging from 17 to 47.5 basis points, depending on the company's Earnings Coverage Ratio. Moody's also pays quarterly facility fees, ranging from 8 to 15 basis points of the facility amount, based on the same ratio.