Summary
AT&T Inc. (T) filed an 8-K report on January 21, 2015, to disclose the execution of two significant credit agreements on January 20, 2015. The company secured a $9.155 billion Syndicated Credit Agreement, comprising a $6.286 billion Tranche A Facility and a $2.869 billion Tranche B Facility. Additionally, AT&T entered into a $2.0 billion 18-Month Credit Agreement. These agreements provide AT&T with substantial liquidity, intended for general corporate purposes, including potential acquisition-related payments. The terms outline varying repayment schedules and interest rates tied to AT&T's credit ratings, with specific covenants and events of default detailed.
Key Highlights
- 1AT&T secured a new $9.155 billion Syndicated Credit Agreement, split into a $6.286 billion Tranche A Facility and a $2.869 billion Tranche B Facility.
- 2A separate $2.0 billion 18-Month Credit Agreement was also established.
- 3The aggregate new credit facilities total $11.155 billion.
- 4Proceeds from these agreements are designated for general corporate purposes, including potential acquisition funding.
- 5The Syndicated Credit Agreement has a termination date of March 21, 2015, for new advances.
- 6Interest rates are variable and dependent on AT&T's credit ratings from S&P, Moody's, and Fitch, with different margins for Tranche A, Tranche B, and the 18-Month facility.
- 7Key covenants include maintaining a debt-to-EBITDA ratio not exceeding 3.0 to 1 and customary affirmative and negative covenants.
Frequently Asked Questions
AT&T has secured a total of $11.155 billion in new credit through the $9.155 billion Syndicated Credit Agreement and the $2.0 billion 18-Month Credit Agreement.
The proceeds from these credit agreements are intended for general corporate purposes, which may include funding for acquisitions.
Interest rates are variable and depend on AT&T's unsecured senior long-term debt ratings from Standard & Poor's, Fitch, and Moody's. The 'Applicable Margin' will differ based on these ratings and whether the loan is a Base Rate Advance or a Eurodollar Rate Advance, with different margins for the Tranche A, Tranche B, and 18-Month facilities.
A primary financial covenant is the requirement for AT&T to maintain a debt-to-EBITDA ratio of not more than 3.0 to 1, calculated according to specific GAAP adjustments and pro forma effects for material acquisitions or dispositions. The agreement also includes customary affirmative and negative covenants.