Business Context and Reporting Period
Company: Xylem Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: March 27, 2015
Event: Entry into a new material definitive agreement and termination of a prior credit facility.
Key Financial Metrics and Liquidity
This filing details a refinancing of the company's credit facilities rather than reporting operational financial results (revenue, profit, or cash flow).
- New Facility: Five-Year Revolving Credit Facility (2015 Credit Agreement).
- Aggregate Principal Amount: Up to $600,000,000.
- Expansion Option: Up to an additional $200,000,000, for a maximum total of $800,000,000.
- Outstanding Borrowings: $0 as of the date of the report.
- Interest Rate Structure: Base rate or adjusted LIBOR plus an applicable margin.
- Financial Covenant: Must maintain a consolidated total debt to consolidated EBITDA ratio based on the last four fiscal quarters.
Material Changes Versus Prior Period
The company replaced its existing credit structure with a new agreement:
- Termination: The Four-Year Competitive Advance and Revolving Credit Facility Agreement dated October 25, 2011 (2011 Credit Agreement) was terminated on March 27, 2015.
- Continuity: The new facility maintains the same aggregate principal amount ($600 million) and expansion option ($200 million) as the terminated 2011 agreement.
- Duration: The new facility extends the term to five years.
Guidance, Outlook, and Risks
Management Commentary and Use of Proceeds: The facility is intended for working capital and other general corporate purposes. The filing does not provide specific operational guidance or outlook for future revenue or earnings.
Risks and Covenants: The agreement includes restrictive covenants limiting secured debt, liens, sale and lease-back transactions, mergers, consolidations, liquidations, dissolutions, and asset sales. It also contains customary events of default.
Important Facts for Investor Verification
- Verify the specific interest rate margins and commitment fees applicable to the new 2015 Credit Agreement, as these depend on the company's credit rating.
- Confirm the company's current consolidated total debt to EBITDA ratio to ensure compliance with the new covenant requirements.
- Review the full text of the 2015 Credit Agreement (Exhibit 10.1) for detailed definitions of "consolidated EBITDA" and specific restrictions on asset sales or additional indebtedness.
- Note that no borrowings were outstanding under the new facility immediately upon execution.