8-KMaterial AgreementsFinancial EventsExhibits & Filings

AT&T INC. 8-K Report, Material Agreement (Nov 18, 2022)

Filed November 18, 2022For Securities:TT-PCTBBT-PA

Summary

AT&T Inc. (T) has announced the entry into a $12.0 billion Amended and Restated Credit Agreement, replacing its previous $7.5 billion facility. This new agreement, effective November 18, 2022, and maturing on November 18, 2027, provides AT&T with significant liquidity for general corporate purposes. The increased credit line offers enhanced financial flexibility and demonstrates the company's access to capital markets. The new credit agreement introduces a tiered interest rate structure based on AT&T's unsecured long-term debt ratings, with rates varying for USD, EUR, and Sterling advances. A key covenant includes a net debt-to-EBITDA ratio not to exceed 3.75 to 1, which is crucial for maintaining compliance and favorable borrowing costs. The company's current ratings from S&P, Moody's, and Fitch place it at specific margin and fee levels, though these are subject to change.

Key Highlights

  • 1AT&T entered into a $12.0 billion Amended and Restated Credit Agreement, increasing its available revolving credit from $7.5 billion.
  • 2The new credit facility matures on November 18, 2027, providing five years of access to funds.
  • 3Advances under the agreement are for general corporate purposes, offering flexibility for strategic initiatives or operational needs.
  • 4Interest rates are variable and linked to benchmarks like Term SOFR, EURIBOR, or SONIA, plus an applicable margin that adjusts based on AT&T's unsecured long-term debt ratings.
  • 5A key financial covenant requires AT&T to maintain a net debt-to-EBITDA ratio of not more than 3.75 to 1.
  • 6The agreement includes provisions for extending commitments and increasing the total commitment amount up to $14 billion.
  • 7The previous $7.5 billion credit agreement dated December 11, 2018, was terminated in connection with entering the new agreement.

Frequently Asked Questions

The primary purpose of the $12.0 billion Amended and Restated Credit Agreement is to provide AT&T with enhanced financial flexibility for general corporate purposes. This includes supporting ongoing operations, strategic investments, and potential refinancing needs.

The borrowing costs are variable and dependent on AT&T's unsecured long-term debt ratings. The applicable margin for Benchmark Rate Advances is currently set at 1.045% and the facility fee at 0.080% based on its current BBB (S&P), Baa2 (Moody's), and BBB+ (Fitch) ratings. If AT&T's credit ratings improve, borrowing costs could decrease, and vice versa.

A significant financial covenant is the requirement to maintain a net debt-to-EBITDA ratio of not more than 3.75 to 1, calculated on a pro forma basis that accounts for material acquisitions or dispositions. Failure to meet this covenant could lead to an event of default.

The obligations of the lenders under the Revolving Credit Agreement to provide advances will terminate on November 18, 2027. The agreement also includes options for extending the commitments for two one-year periods beyond the initial termination date.