Business Context and Reporting Period
Company: Flowserve Corporation
Filing Type: Form 8-K (Current Report)
Date of Report: October 30, 2009
Event: Entry into a Material Definitive Agreement (Letter of Credit Agreement).
Key Financial Metrics
This filing reports on a specific financing arrangement rather than periodic operating results. Key metrics related to the new agreement include:
- Facility Type: Letter of Credit Agreement.
- Aggregate Commitment: €125,000,000 (Euro).
- Term: 364-day period with options for extension.
- Commitment Fee: 40 basis points (0.40%) on unutilized commitments.
- Utilization Fee: 135 basis points (1.35%) per annum on issued letters of credit.
- Effective Annual Fee Rate (as of Oct 30, 2009): 1.35%.
Note: The filing text does not provide values for revenue, profit, cash flow, margins, or total debt levels outside the context of this specific facility.
Material Changes Versus Prior Period
The new Agreement replaces the Company's existing Letter of Credit Agreement (the "Existing LOC") originally entered into in September 2007, which was set to expire on November 9, 2009.
- Continuity: The initial commitment of €125,000,000 includes commitments from Calyon and other issuing banks currently existing under the Existing LOC.
- Transition: Existing commitments will remain outstanding and permitted to expire pursuant to their terms, with new commitments made under the Agreement to replace them as they expire.
Guidance, Outlook, and Risks
Management Commentary: The Company may request extensions of the availability period for additional 364-day periods upon 45 days' notice to Calyon. The aggregate commitment may be decreased by the Company, provided it equals or exceeds the aggregate face amount of all outstanding letters of credit and disbursements.
Risks and Contingencies: Flowserve Corporation guarantees any and all obligations and liabilities of its subsidiaries and itself under the Agreement for any issued letter of credit or related disbursement by a lender.
Important Facts for Investor Verification
- Verify the total outstanding letters of credit under the new €125 million facility to assess immediate liquidity usage.
- Confirm the identity of the "other financial institutions" named as co-lenders alongside Calyon.
- Review the full text of the Letter of Credit Agreement (Exhibit 10.1) for specific covenants and default provisions not detailed in this summary.
- Monitor the Company's ability to extend the 364-day term if the facility is not renewed or replaced prior to expiration.