Summary
AT&T Inc. (T) filed an 8-K on December 12, 2018, to disclose the execution of two new credit agreements totaling $15 billion in aggregate commitment. The first is a $7.5 billion Amended and Restated Credit Agreement, which amends and restates a prior agreement, and the second is a new $7.5 billion Five Year Credit Agreement. Both agreements have Citibank, N.A. as agent and are intended for general corporate purposes. These new facilities provide AT&T with significant liquidity and flexibility in managing its financing needs.
Key Highlights
- 1AT&T entered into two new credit agreements, a $7.5 billion Amended and Restated Credit Agreement and a $7.5 billion Five Year Credit Agreement, totaling $15 billion in new borrowing capacity.
- 2These credit facilities are for general corporate purposes, indicating AT&T's intention to maintain financial flexibility.
- 3The Amended and Restated Credit Agreement has a termination date of December 11, 2021, while the Five Year Credit Agreement extends to December 11, 2023.
- 4Borrowing costs are variable and tied to AT&T's unsecured long-term debt ratings from S&P, Moody's, and Fitch, with specific applicable margins and facility fees detailed.
- 5A key financial covenant requires AT&T to maintain a net debt-to-EBITDA ratio of not more than 3.5 to 1, with specific adjustments for unrestricted cash.
- 6The agreements include standard covenants and events of default, such as failure to pay debt exceeding $1 billion or breaches of material representations.
- 7The company has the option to extend the commitments under each agreement for two one-year periods and can increase the aggregate commitments up to $17 billion.
Frequently Asked Questions
AT&T has secured a total of $15 billion in new borrowing capacity through the two credit agreements: a $7.5 billion Amended and Restated Credit Agreement and a $7.5 billion Five Year Credit Agreement.
The funds drawn under these credit agreements are intended for general corporate purposes, providing AT&T with flexibility for its ongoing business operations and strategic initiatives.
A significant financial covenant requires AT&T to maintain a net debt-to-EBITDA ratio of no more than 3.5 to 1. This ratio calculation involves specific adjustments for unrestricted cash and cash equivalents, both domestic and international, and is based on consolidated net income over four quarters, with exclusions for certain non-recurring items.
The Amended and Restated Credit Agreement commitments terminate on December 11, 2021, while the Five Year Credit Agreement commitments extend to December 11, 2023. All advances must be repaid no later than these dates.