8-KMaterial AgreementsFinancial EventsExhibits & Filings

PEPSICO INC 8-K Report, Material Agreement (May 23, 2006)

Filed May 23, 2006For Securities:PEP

Summary

PepsiCo, Inc. (PEP) announced on May 23, 2006, the execution of a new five-year unsecured revolving credit agreement, effective May 22, 2006. This agreement provides the company with access to a $1.5 billion credit facility, which can be increased up to $2.0 billion under certain conditions. The facility is intended for general corporate purposes, including supporting its commercial paper program, and replaces previous credit facilities totaling $2.1 billion, under which no funds were outstanding. This move indicates PepsiCo's proactive approach to managing its liquidity and capital structure. The establishment of a significant, multi-year credit line provides financial flexibility and reinforces the company's ability to meet its short-term obligations and fund its ongoing operations and strategic initiatives. Investors can view this as a positive sign of financial stability and operational readiness.

Key Highlights

  • 1PepsiCo entered into a new $1.5 billion unsecured revolving credit agreement on May 22, 2006.
  • 2The credit facility has a five-year term, expiring on May 22, 2011.
  • 3The agreement allows for potential increases in credit availability up to $2.0 billion.
  • 4Funds borrowed under the agreement are for general corporate purposes, including supporting commercial paper.
  • 5This new facility replaces prior credit facilities totaling $2.1 billion.
  • 6There were no outstanding borrowings under the prior credit facilities at the time of their termination.
  • 7Citibank, N.A. serves as the administrative agent for the new credit agreement.

Frequently Asked Questions

The new credit agreement is primarily for general corporate purposes, which includes supporting PepsiCo's outstanding commercial paper issuances. It provides the company with financial flexibility and readily available funds for its operations.

The agreement establishes a revolving credit facility of $1.5 billion. However, PepsiCo has the option to increase this amount up to $2.0 billion, subject to the agreement of existing or new lenders.

Not necessarily. This is a credit facility, meaning it's an arrangement to borrow funds if needed. At the time of the filing, PepsiCo had not borrowed any funds under the new agreement, nor were there any outstanding borrowings under the previous credit facilities it replaced. It provides a source of liquidity rather than immediate new debt.

The new $1.5 billion facility replaces PepsiCo's previous credit facilities which totaled $2.1 billion. Although the total potential amount is lower, the new agreement is a multi-year facility providing a clear framework for accessing funds.