Summary
AT&T Inc. (T) has entered into a $7.35 billion Amended and Restated Term Loan Credit Agreement, dated March 2, 2022. This new facility is primarily for refinancing existing borrowings under a prior term loan agreement from January 2021. The loan carries variable interest rates based on either a Base Rate or Term SOFR, plus an applicable margin that adjusts based on the company's senior unsecured long-term debt ratings. The entire principal of this new $7.35 billion term loan is due on December 31, 2022. A significant covenant within the agreement is a net debt-to-EBITDA ratio of not more than 4.0 to 1, with specific calculations for indebtedness and EBITDA that include adjustments for cash, acquisitions, and dispositions. The agreement also outlines several events of default, which could lead to acceleration of the debt or increased interest rates, including failure to pay, breaches of covenants, or significant debt defaults at other levels.
Key Highlights
- 1AT&T entered into a $7.35 billion Amended and Restated Term Loan Credit Agreement on March 2, 2022.
- 2The purpose of the new loan is to refinance existing borrowings from a January 2021 term loan.
- 3The loan features variable interest rates tied to Base Rate or Term SOFR, plus a margin dependent on AT&T's credit ratings.
- 4The full principal amount of the $7.35 billion loan matures on December 31, 2022.
- 5A key financial covenant requires AT&T to maintain a net debt-to-EBITDA ratio of not more than 4.0 to 1.
- 6The agreement includes specific definitions and adjustments for calculating the net debt-to-EBITDA ratio, factoring in cash, unrestricted cash outside the U.S., and pro forma impacts of acquisitions/dispositions.
- 7Several events of default are outlined, which could trigger debt acceleration or penalty interest rates.