8-KMaterial AgreementsFinancial EventsExhibits & Filings

ROCKWELL AUTOMATION, INC 8-K Report, Material Agreement (Jul 1, 2022)

Filed July 1, 2022For Securities:ROK

Summary

Rockwell Automation, Inc. (ROK) has entered into a new $1.5 billion, five-year unsecured revolving credit agreement, effective June 29, 2022. This new agreement replaces a previous $1.25 billion credit facility and was terminated early without any penalties. The Company has the flexibility to increase the credit line by an additional $750 million and to request two one-year extensions on the maturity date, subject to lender approval. Proceeds from this revolving credit facility are designated for general corporate purposes, providing Rockwell Automation with enhanced financial flexibility and liquidity. The agreement includes standard covenants, such as restrictions on incurring secured debt and maintaining a minimum Consolidated EBITDA to Consolidated Interest Expense ratio of 3.00 to 1.00. The interest rates are tied to the base rate or SOFR, with margins determined by the Company's long-term debt ratings, indicating a link between financial performance and borrowing costs.

Key Highlights

  • 1Entered into a new $1.5 billion, five-year unsecured revolving credit agreement on June 29, 2022.
  • 2The new agreement replaces a prior $1.25 billion credit facility, which was terminated early without penalty.
  • 3Flexibility to increase the credit commitment by up to $750 million.
  • 4Options to extend the maturity date for an additional year, twice, subject to lender consent.
  • 5Proceeds are for general corporate purposes, enhancing liquidity and financial flexibility.
  • 6Interest rates are variable, based on base rate or SOFR, with margins tied to the Company's debt ratings.
  • 7Includes customary covenants, such as a minimum leverage ratio (Consolidated EBITDA to Consolidated Interest Expense) of 3.00 to 1.00.

Frequently Asked Questions

The new $1.5 billion credit agreement is primarily for general corporate purposes, providing Rockwell Automation with increased financial flexibility and liquidity. This can be used for various business needs, including working capital, investments, or strategic initiatives.

The facility is a $1.5 billion, five-year unsecured revolving credit agreement. It offers the option to increase the total commitment by $750 million and allows for two one-year maturity extensions, subject to lender approval. Interest rates are variable, linked to either the base rate or SOFR, with margins adjusted based on Rockwell Automation's credit ratings. Standard financial covenants, including a leverage ratio, are also in place.

This agreement provides Rockwell Automation with a larger and potentially longer-term source of funding than its previous credit facility. The flexibility to increase the credit line and extend the maturity date offers strategic advantages in managing its capital structure. The unsecured nature of the facility and its tie to credit ratings suggest the company maintains a strong financial standing.

The filing explicitly states that Rockwell Automation did not incur any early termination penalties when terminating the old agreement. The new agreement has terms and conditions that will apply to any future borrowings, including interest payments and compliance with covenants, but there were no immediate financial costs reported for the termination itself.