Business Context and Reporting Period
KBR, Inc. filed this Form 8-K Current Report on November 4, 2009, regarding events occurring on November 3, 2009. The filing details the entry into a new material definitive agreement concerning the company's credit facilities.
Key Financial Metrics and Debt Structure
The filing focuses on the restructuring of the company's revolving credit facility rather than reporting period-specific revenue or profit metrics.
- New Credit Facility: A syndicated, unsecured three-year revolving credit agreement totaling $1.075 billion.
- Capacity Allocation: Funds are designated for working capital and up to $830 million in letters of credit for general corporate purposes.
- Interest Rates: Variable rates based on LIBOR plus 3% or a Base Rate plus 2%.
- Fees: Commitment fee of 0.625% on unused portions; letter of credit fees of 1.5% for performance/commercial and 3% for others.
- Financial Covenants:
- Maximum consolidated debt to consolidated EBITDA ratio of 3.5 to 1.
- Minimum consolidated net worth of $2 billion plus 50% of consolidated net income for quarters ending after September 30, 2009.
Material Changes Versus Prior Period
The new Credit Agreement replaces and terminates the existing Five Year Revolving Credit Agreement dated December 16, 2005. The primary change is the reduction of the facility term from five years to three years and the establishment of new interest rate spreads and fee structures.
Outlook, Risks, and Management Commentary
The filing does not contain forward-looking guidance, management commentary on operational performance, or specific risk factors beyond the standard covenants of the credit agreement. The agreement includes covenants similar to the prior agreement, with the addition of specific financial maintenance ratios regarding debt-to-EBITDA and net worth.
Key Facts for Investor Verification
- Verify the company's current consolidated debt and EBITDA to ensure compliance with the new 3.5 to 1 debt-to-EBITDA covenant.
- Confirm the company's consolidated net worth meets the $2 billion threshold plus the applicable percentage of net income.
- Review the specific terms of the attached Exhibit 10.1 for any additional covenants or conditions not summarized in the 8-K text.
- Note that the filing does not provide current revenue, profit, or cash flow figures; these must be sourced from the most recent 10-Q or 10-K.