Business Context and Reporting Period
Company: Mastercard Incorporated
Filing Type: Form 8-K (Current Report)
Date of Report: November 14, 2019
Event: Entry into a Material Definitive Agreement (Item 1.01)
Key Financial Metrics and Liquidity
This filing details a new financing arrangement rather than reporting operational financial results (revenue, profit, or cash flow) for a specific period.
- New Credit Facility: $6,000,000,000 committed five-year unsecured revolving credit facility.
- Previous Facility: Amended and restated a prior $4,500,000,000 facility.
- Expiration Date: November 14, 2024.
- Currency Options: Borrowings available in U.S. dollars and/or Euros.
- Interest Rate: LIBOR or alternative base rate plus applicable margins based on issuer rating.
- Prepayment Terms: Can be prepaid, terminated, or reduced without penalty in minimum amounts of $10.0 million.
Material Changes Versus Prior Period
The primary material change is the expansion of the company's liquidity capacity and the extension of the maturity date:
- Capacity Increase: Borrowing capacity increased from $4.5 billion to $6.0 billion.
- Maturity Extension: The facility term was extended from an expiration of November 15, 2023, to November 14, 2024.
- Lender Composition: The new facility involves a syndicate of major global banks including Citibank, JPMorgan Chase, Bank of America, and others.
Guidance, Risks, and Covenants
The filing outlines specific restrictive covenants and risks associated with the new agreement:
- Liens: Limits the creation of liens, with exceptions for liens not exceeding the greater of $600 million or 4% of consolidated total assets, and deposits for acquisitions.
- Fundamental Changes: Restricts mergers, sales of substantially all assets, or liquidation without lender consent.
- Asset Dispositions: Limits asset disposals outside the ordinary course of business to no more than 25% of consolidated total assets in any twelve-month period.
- Affiliate Transactions: Prohibits transactions with affiliates that are not on fair or reasonable terms.
- Related Party Transactions: Notes that many lenders are customers or affiliates of Mastercard International Incorporated and may receive customary fees for banking services.
Investor Verification Checklist
- Verify the current utilization rate of the new $6 billion facility versus the previous $4.5 billion facility.
- Confirm the current credit rating of Mastercard to determine the applicable interest rate margins and facility fees.
- Review subsequent filings for any drawdowns on the facility or changes in the company's debt structure.
- Monitor compliance with the 25% asset disposition limit and the $600 million/4% lien cap.