Item 1.01. Entry into a Material Definitive Agreement.
On May 1, 2020, Cummins Inc. (the "Company") entered into a 364-Day Credit
Agreement (the "Credit Agreement") by and among the Company, the subsidiary
borrowers from time to time party thereto (together with the Company, the
"Borrowers"), the lenders from time to time party thereto, and JPMorgan Chase
Bank, N.A., as administrative agent, providing for a $2 billion revolving credit
facility that terminates on April 30, 2021.
The borrowings under the Credit Agreement will not be secured with liens on any
of the Company's or its subsidiaries' assets. The Company will guarantee all
borrowings by the subsidiary Borrowers under the Credit Agreement, if any. As of
May 1, 2020, there were no subsidiary Borrowers under the Credit Agreement.
Borrowings under the Credit Agreement will bear interest at varying rates,
depending on the type of loan and, in some cases, the rates of designated
benchmarks and the applicable Borrower's election. For all borrowings under the
Credit Agreement, the applicable Borrower may choose among the following
interest rates: (i) solely in the case of U.S. dollar-denominated loans, an
interest rate equal to the highest of (1) the prime rate in effect from time to
time, (2) the greater of (A) the federal funds effective rate in effect from
time to time and (B) the overnight bank funding rate in effect from time to
time, in each case plus 0.5% and (3) the Adjusted LIBO Rate for a one month
interest period plus 1.00%; or (ii) an interest rate equal to the Adjusted LIBO
Rate for the applicable interest period plus a rate ranging from 1.25% to 2.00%,
depending on the credit rating of the Company's senior unsecured long-term debt.
The Adjusted LIBO Rate is a rate determined by reference to the rate payable on
deposits in the relevant currency in the London interbank market. Currently,
the Company's senior unsecured long-term debt is rated A2 by Moody's Investors
Service, Inc. and A+ by Standard & Poor's Financial Services LLC, which would
result in a rate of the Adjusted LIBO Rate plus 1.25% under (ii) above. Credit
ratings are not recommendations to buy and are subject to change, and each
rating should be evaluated independently of any other rating. The Company
undertakes no obligation to update disclosures concerning its credit ratings,
whether as a result of new information, future events or otherwise. In addition,
the Company is required to pay on September 30, 2020 for the account of each
lender a duration fee of 0.10% of the loan commitment then outstanding held by
such lender on such date.
The Credit Agreement contains customary events of default and financial and
other covenants, including a financial covenant requiring that the ratio of (i)
the consolidated net debt of the Company and its subsidiaries, subject to
certain adjustments, to (ii) the consolidated total capital of the Company and
its subsidiaries as of the last day of each fiscal quarter not be greater than
0.65:1.
There are no material relationships between the Company or its affiliates and
any of the lenders under the Credit Agreement other than in connection with the
Credit Agreement and the Company's other syndicated credit facilities. The
description of the Credit Agreement set forth above does not purport to be
complete and is qualified in its entirety by reference to the full text of the
Credit Agreement, which is filed herewith as Exhibit 10.1 and incorporated
herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information included in Item 1.01 above is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. The exhibits listed in the Exhibit Index below are filed as
part of this report.
© Edgar Online, source Glimpses