Business Context and Reporting Period
On Holding AG filed a Form 6-K for July 2023, reporting that on July 7, 2023, the Company and certain wholly owned subsidiaries entered into a new multicurrency revolving credit facility.
Financing and Key Terms
- Total facility: CHF 700 million, with an option to increase availability by up to CHF 200 million subject to customary conditions.
- Availability: Subject to a borrowing base calculated from eligible receivables and inventory.
- Expected use: Working capital, general corporate purposes, the roll-in of certain existing bank guarantees, and issuance of new bank guarantees.
- Current borrowing expectation: Management does not currently expect to draw cash from the facility in the near term.
- Interest: Relevant currency reference rate plus a margin of 1.40% to 2.30%, initially 1.40%. U.S. dollar borrowings carry an additional 0.10% funding premium.
- Term: Three years, with two potential one-year extensions.
- Security: Pledges of specified inventory and assignments of specified receivables; additional guarantors may be required in certain circumstances.
- Financial covenants: Consolidated Equity must be at least CHF 800 million, and the Group’s leverage ratio must not exceed 3.50x.
Material Changes and Outlook
The filing does not report quarterly or annual revenue, profit, cash flow, margins, or other operating results. The principal development is the establishment of additional committed financing capacity intended to provide future financial flexibility and align financing capacity with the Company’s size and maturity.
Borrowings may be prepaid or availability reduced subject to notice requirements. Continuing events of default may result in termination of availability and acceleration of outstanding borrowings. The agreement also includes customary affirmative and negative covenants.
Important Facts to Verify
- Whether the Company subsequently draws on the facility and the amount and currency of any borrowings.
- Compliance with the CHF 800 million Consolidated Equity covenant and 3.50x leverage covenant.
- The value and composition of eligible receivables and inventory supporting the borrowing base.
- Applicable reference rates, margins, and any U.S. dollar funding premiums on future borrowings.
- Any amendments, extensions, additional guarantors, security interests, or events of default.