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JPMorgan Chase Agents $1B Unsecured Revolver for Textron

October 07, 2013, 07:23 AM
Filed Under: Manufacturing

On October 4, 2013, Textron Inc. (“Textron”) entered into a senior unsecured revolving credit facility (the “Facility Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, Citibank, N.A. and Bank of America, N.A., as syndication agents and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as documentation agent, and other lenders in an aggregate principal amount of $1.0 billion. The Facility Agreement expires in October 2018 and replaces the $1.0
billion 4-year facility that was scheduled to expire in March 2015.

Textron will have two options with respect to interest on syndicated borrowings under the Facility Agreement. The first option is for interest to be payable at a rate per annum equal to the Base Rate which is the greatest of (a) the Prime Rate, (b) the Federal Funds Rate plus ½ of 1% and (c) the sum of 1% plus the one-month LIBOR rate for U.S. dollar deposits, plus a margin which can range from 0 basis points to 70 basis points depending on Textron’s senior unsecured long-term debt ratings as determined by Standard & Poor’s Ratings Service (“S&P”), Moody’s Investor Service, Inc. (“Moody’s”) and Fitch Ratings Ltd. (“Fitch”). Based on Textron’s current S&P, Moody’s and Fitch ratings (BBB-, Baa3 and BBB-, respectively) the Base Rate Margin would be 27.5 basis points. Alternatively, Textron may opt to pay interest at a rate equal to the sum of the applicable Eurodollar Rate, plus a margin which can range from 100 basis points to 170 basis points depending upon Textron’s ratings. This Eurodollar Margin would currently be 127.5 basis points.

Textron also will pay a quarterly facility fee under the Facility Agreement, regardless of borrowing activity. This fee will range from 12.5 basis points to 30 basis points, depending on Textron’s ratings by S&P, Moody’s and Fitch. At Textron’s current rating, the fee is 22.5 basis points. The Facility Agreement provides that up to $100 million is available for the issuance of letters of credit in lieu of borrowings. Letters of credit are subject to fronting fees and accrue charges at the Letter of Credit Fee Rate which is equivalent to the Eurodollar Margin.

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