Summary
Norfolk Southern Corporation (NSC) has filed an 8-K to report the establishment of a new 5-year, $750 million unsecured revolving credit facility, effective December 14, 2011. This new facility replaces a prior $1 billion credit line that was terminated early without penalty. The new credit facility provides NSC with access to funds for general corporate purposes, with interest rates tied to the Prime Rate or LIBOR, influenced by the company's credit rating. The agreement includes standard financial covenants related to capital structure and borrowing ratios, as well as limitations on subsidiary debt.
Key Highlights
- 1Establishment of a new 5-year, $750 million unsecured revolving credit facility.
- 2The new facility is for general corporate purposes.
- 3The new credit facility replaces a prior $1 billion facility that was terminated on December 14, 2011.
- 4The termination of the prior facility occurred in advance of its stated expiration and without incurring early termination penalties.
- 5Interest rates under the new facility vary based on loan type and NSC's unsecured long-term debt rating.
- 6The agreement contains typical financial covenants regarding consolidated total capital, borrowing ratios, and limitations on subsidiary debt.
Frequently Asked Questions
The primary purpose of this 8-K filing is to inform investors about Norfolk Southern Corporation's entry into a new $750 million unsecured revolving credit facility and the termination of its previous credit facility.
The new credit facility is for $750 million and has a term of 5 years, becoming effective on December 14, 2011.
The filing indicates that the previous $1 billion credit facility was terminated early, in advance of its stated expiration date. While the exact reasons aren't detailed, it was done without incurring any early termination penalties, suggesting a strategic decision to transition to the new, potentially more favorable or suitable, facility.
The new agreement includes standard financial covenants such as those related to the company's consolidated total capital and related borrowing ratios. It also imposes limitations on the amount of other debt that the company's subsidiaries can incur.