Summary
This 8-K filing from PayPal Holdings, Inc. (PYPL) on November 27, 2018, details a significant amendment and restatement of its credit agreement. The company has secured an unsecured $5.0 billion 364-day delayed-draw term loan credit facility, which offers flexibility for capital allocation and general corporate purposes. As of the filing date, $2.0 billion was outstanding, leaving $3.0 billion in available borrowing capacity. This facility provides PayPal with substantial liquidity, which can be drawn in up to four separate borrowings. The terms include competitive interest rates tied to LIBOR or prime rates, with covenants ensuring financial health through interest coverage and leverage ratios. The agreement also includes provisions for early termination or repayment if the company issues new debt or enters into other credit facilities, indicating a strategic approach to managing its capital structure and debt obligations.
Key Highlights
- 1PayPal entered into an amended and restated credit agreement for a $5.0 billion unsecured 364-day delayed-draw term loan facility.
- 2The facility allows for up to four separate borrowings, providing financial flexibility.
- 3As of November 26, 2018, $2.0 billion was outstanding, with $3.0 billion remaining available.
- 4Funds can be used for capital allocation and general corporate purposes.
- 5Interest rates are tied to LIBOR plus a margin (1.00%-1.25%) or prime/NYFRB rate plus a margin (0%-0.25%), based on debt ratings.
- 6The agreement includes customary covenants, including financial tests for consolidated interest coverage and leverage ratios.
- 7The facility terminates on November 25, 2019, with provisions for early termination or mandatory repayment upon other debt issuances or credit facilities.