What is the purpose of the new Credit Agreement?

The Credit Agreement provides Workday with significant financial flexibility, establishing a $750 million term loan and a $750 million revolving credit facility. This allows the company to access substantial capital for general corporate purposes, strategic initiatives, or to manage its liquidity.

When do the new credit facilities mature?

The revolving credit facility has a maturity date of April 2, 2025. The term loans also mature on this date, but have a specific quarterly repayment schedule starting in October 2020.

What is the significance of Michael C. Bush's appointment to the Board?

Michael C. Bush brings extensive experience in leading and growing organizations, employee engagement, and corporate culture. His appointment to the Board suggests a continued focus on strong governance and strategic oversight as Workday continues its development.

Are there any financial covenants associated with the new credit facility?

Yes, the Credit Agreement includes a financial covenant requiring Workday not to exceed a maximum leverage ratio of 3.50:1.00, with a potential step-up to 4.50:1.00 following an acquisition. This indicates lenders' ongoing concern with Workday's debt levels relative to its earnings.

WDAY 8-K: Leadership Changes, Material Agreements & More

Summary

Workday, Inc. (WDAY) announced a significant financing event through a new Credit Agreement entered into on April 2, 2020. This agreement establishes a $750 million term loan facility and a $750 million revolving credit facility, providing substantial liquidity and financial flexibility for the company. The term loan has a staggered availability and repayment schedule, while the revolving credit facility is available for borrowing and reborrowing until April 2, 2025. This new credit facility offers Workday options for interest rate and currency, along with the ability to prepay without penalty, underscoring prudent financial management. In addition to the financing news, Workday also announced a change in its Board of Directors. Michael C. Bush was appointed as a Class II director. Mr. Bush brings extensive leadership experience from his roles at Great Place to Work Institute and other organizations, focusing on organizational growth, employee engagement, and corporate culture. His appointment, along with a new restricted stock unit grant, suggests a continued focus on strong governance and strategic leadership as the company navigates its growth trajectory.

Key Highlights

1Workday entered into a new Credit Agreement on April 2, 2020, establishing a $750 million term loan facility and a $750 million revolving credit facility.
2The revolving credit facility has a maturity date of April 2, 2025, with options to extend.
3The term loan facility has specific drawdown conditions and a scheduled quarterly repayment plan starting October 2020.
4The Credit Agreement allows for penalty-free prepayment of loans and reduction of commitments.
5As of the agreement date, Workday had a $500 million outstanding term loan and no outstanding revolving loans under this new facility.
6Michael C. Bush was appointed as a new Class II director to the Board, effective April 2, 2020.
7Mr. Bush's appointment is accompanied by a $750,000 restricted stock unit grant vesting over a period of time.
8Workday amended its bylaws to designate federal district courts as the exclusive forum for Securities Act of 1933 litigation.

Workday, Inc. 8-K Report, Material Agreement (Apr 6, 2020)

Summary

Key Highlights

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