Summary
Thermo Fisher Scientific Inc. (TMO) announced on December 4, 2020, the establishment of a new $3.0 billion unsecured five-year revolving credit facility, replacing its previous $2.5 billion facility. This significant increase in borrowing capacity, set to expire on December 4, 2025, with potential for two one-year extensions, provides the company with enhanced financial flexibility for various corporate purposes. The new credit facility allows for potential additional increases of up to $1.0 billion and will be used for working capital, capital expenditures, acquisitions, stock repurchases, debt refinancing, and other general corporate needs. The terms include variable interest rates based on credit ratings, a facility fee, and customary covenants, including a minimum consolidated net interest coverage ratio of 3.5 to 1.0. This move demonstrates the company's proactive management of its debt structure to support ongoing strategic initiatives and operational needs.
Key Highlights
- 1Thermo Fisher Scientific has secured a new $3.0 billion unsecured five-year revolving credit facility, increasing its borrowing capacity by $500 million from the previous $2.5 billion facility.
- 2The new credit facility has an expiration date of December 4, 2025, with an option for two one-year extensions, providing long-term financial flexibility.
- 3The facility includes an expansion option allowing for an additional $1.0 billion in borrowings, subject to lender consent and certain conditions.
- 4Proceeds from the credit facility can be used for a wide range of corporate purposes, including working capital, capital expenditures, acquisitions, stock repurchases, and debt refinancing.
- 5Borrowing costs are variable, with interest rates tied to the Company's long-term debt credit ratings, ranging from 0.025% to 1.600% plus a base or Eurocurrency rate.
- 6The agreement includes a minimum consolidated net interest coverage ratio covenant of 3.5 to 1.0, indicating a commitment to maintaining financial health.
- 7The Company's obligations are guaranteed by certain subsidiaries, and the agreement contains standard covenants, events of default, and borrower prepayments without penalty.