Summary
PayPal Holdings, Inc. (PYPL) announced on September 11, 2019, the establishment of two new unsecured revolving credit facilities: a $5.0 billion five-year facility and a $1.0 billion 364-day facility. These new credit lines, with JPMorgan Chase Bank, N.A. and its affiliates acting as administrative agents and lenders, provide significant financial flexibility for general corporate purposes, including working capital, capital expenditures, and acquisitions. The company also concurrently terminated its previous 2015 revolving credit facility. The company's ability to increase the five-year facility by an additional $2.0 billion, coupled with the availability of multiple foreign currencies for borrowing, underscores its proactive approach to managing its liquidity and supporting potential growth opportunities. Both credit facilities include customary covenants, including a financial covenant related to a maximum consolidated leverage ratio, indicating a commitment to maintaining financial discipline.
Key Highlights
- 1Established a new $5.0 billion five-year unsecured revolving credit facility.
- 2Secured an additional $1.0 billion 364-day unsecured revolving credit facility.
- 3The company has the option to increase the five-year facility by up to $2.0 billion.
- 4Borrowings can be made in multiple currencies including USD, EUR, GBP, CAD, and AUD.
- 5Both facilities can be used for working capital, capital expenditures, and acquisitions.
- 6A previous 2015 revolving credit facility was terminated on September 11, 2019.
- 7Both new credit facilities contain a financial covenant requiring a maximum consolidated leverage ratio.