8-KMaterial AgreementsFinancial EventsRegulation FD+1

TJX COMPANIES INC /DE/ 8-K Report, Material Agreement (Aug 11, 2020)

Filed August 11, 2020For Securities:TJX

Summary

The TJX Companies, Inc. (TJX) has announced the entry into a new $500.0 million senior unsecured revolving credit facility with a 364-day maturity, effective August 10, 2020. This new facility, alongside existing facilities, increases the company's total available borrowing capacity to $1.5 billion. Importantly, TJX prepaid its $1.0 billion in outstanding revolving credit loans on July 29, 2020, meaning the company currently has no outstanding revolving credit debt and significant liquidity available. This move provides TJX with substantial financial flexibility as it navigates the ongoing economic environment. The terms of the new facility include specific leverage ratio covenants and minimum liquidity requirements, indicating a focus on maintaining a strong financial position. Investors should note the company's proactive approach to managing its debt and ensuring access to capital.

Key Highlights

  • 1TJX entered into a new $500.0 million, 364-day revolving credit facility.
  • 2The new facility brings the company's total available borrowing capacity to $1.5 billion.
  • 3TJX prepaid its $1.0 billion in existing revolving credit loans on July 29, 2020.
  • 4The company currently has no outstanding revolving credit debt.
  • 5The new credit facility has specific leverage ratio covenants (e.g., funded debt to EBITDAR of 5.00:1.00 initially).
  • 6Minimum liquidity of $1.5 billion is required under the new facility until April 30, 2021.
  • 7Interest rates on borrowings range from LIBOR + 110-190 bps or Base Rate + 10-90 bps, plus a quarterly facility fee.

Frequently Asked Questions

The new 364-day revolving credit facility provides TJX with additional financial flexibility and liquidity. By securing this facility, the company ensures it has ample borrowing capacity available, particularly as it manages through an uncertain economic period. It also allows them to proactively manage their debt structure.

The prepayment of $1.0 billion in revolving credit loans demonstrates TJX's strong liquidity position and commitment to reducing debt. It means the company had sufficient cash on hand to pay off these borrowings, leaving them with no outstanding revolving credit debt and a cleaner balance sheet.

The new facility requires TJX to maintain a quarterly-tested leverage ratio of funded debt to EBITDAR. Initially, this ratio must not exceed 5.00 to 1.00 for the test period ending May 1, 2021, and then tightens to 4.50 to 1.00 for the period ending July 31, 2021. Additionally, the company must maintain minimum liquidity of at least $1.5 billion.

The filing does not explicitly state TJX's intention to draw on the new facility. However, establishing the facility and prepaying existing debt indicates a strategic move to optimize its financial position, ensuring readily available capital if needed rather than an immediate need to borrow.