8-KMaterial AgreementsFinancial Events

UNITED PARCEL SERVICE INC 8-K Report, Material Agreement (Apr 18, 2008)

Filed April 18, 2008For Securities:UPS

Summary

United Parcel Service, Inc. (UPS) filed an 8-K on April 17, 2008, reporting the entry into a new $4.5 billion 364-day revolving credit facility. This new facility, with Citibank, N.A. as administrative agent, replaces two previously existing credit facilities, totaling $8.0 billion, which were terminated in conjunction with the new agreement. The new facility provides UPS with significant liquidity for general corporate purposes, including a commercial paper backstop. It offers flexibility in interest rate options, including LIBOR-based or base rate advances, with a margin of 0.13% for USD advances and competitive bid options for maturities of at least seven days. The facility matures on April 18, 2009, with an option to renew for an additional 364 days or convert to a term loan maturing by April 18, 2010, with a slightly increased margin on converted term loans.

Key Highlights

  • 1UPS entered into a new $4.5 billion 364-day revolving credit facility effective April 17, 2008.
  • 2The new credit facility replaces two prior facilities totaling $8.0 billion, which were terminated.
  • 3The facility provides for USD and non-USD advances with interest rates tied to LIBOR plus a 0.13% margin or a base rate.
  • 4UPS has the option to request competitive bid advances with maturities of at least seven days.
  • 5The facility matures on April 18, 2009, with options to renew or convert to a term loan.
  • 6The proceeds are intended for general corporate purposes, including a commercial paper backstop.
  • 7Customary covenants and events of default are included, typical for such credit agreements.

Frequently Asked Questions

The primary purpose of the new $4.5 billion 364-day revolving credit facility is to provide United Parcel Service (UPS) with general corporate financing flexibility, specifically mentioning its use as a commercial paper backstop.

This new $4.5 billion facility replaces two previous credit facilities that totaled $8.0 billion. While the amount of available credit is reduced, the new facility provides continued access to revolving credit and includes options for renewal or conversion to a term loan.

The facility offers interest rates based on LIBOR plus a 0.13% margin for USD advances or Citibank's base rate. It also allows for competitive bids on interest rates and maturities. An annual facility fee of 0.02% on the aggregate commitment is payable, and UPS can reduce commitments with notice.

The facility matures on April 18, 2009. UPS has the option to renew it for an additional 364-day period or convert outstanding amounts into a term loan that would mature by April 18, 2010. If converted to a term loan, the margin on LIBOR-based interest would increase to 0.25%.