Item 1.01. Entry into a Material Definitive Agreement.
On September 5, 2017, Cummins Inc. (the "Company") entered into a 364-day credit
agreement (the "New Credit Agreement") by and among the Company, certain of its
subsidiaries (together with the Company, the "Borrowers") and the lenders (the
"Lenders") named therein. Under the New Credit Agreement, the Borrowers may
obtain revolving and swingline loans, in each case subject to certain amount
limitations, in an amount up to $1.0 billion in the aggregate outstanding at any
time prior to September 4, 2018 (the "Commitment Termination Date"). These
borrowings will not be secured with liens on any of the Company's or its
subsidiaries' assets. The Company will guarantee all borrowings by the
subsidiary Borrowers under the New Credit Agreement.
The Company may from time to time prior to the Commitment Termination Date
increase the maximum availability under the New Credit Agreement by up to $500
million if certain conditions are satisfied, including (i) the absence of any
default or event of default under the New Credit Agreement, and (ii) the Company
obtaining the consent of the Lenders participating in each such increase. In
addition, prior to the Commitment Termination Date, the Company may, by notice
to the administrative agent and subject to certain other conditions set forth in
the New Credit Agreement including the absence of any default or event of
default, elect to convert all or a ratable portion of the outstanding revolving
loans under the New Credit Agreement into term loans (the "Term-Out Option")
that will mature on the first anniversary of the Commitment Termination Date.
The Borrowers will pay a fee to the Lenders equal to 0.5% of the aggregate
principal amount of the outstanding revolving loans converted into term loans
pursuant to the Term-Out Option.
Borrowings under the New Credit Agreement will bear interest at varying rates,
depending on the type of loan and, in some cases, the rates of designated
benchmarks and the Borrower's election. For all borrowings under the New Credit
Agreement, Borrowers may choose among the following interest rates: (i) solely
in the case of U.S. dollar-denominated loans, an interest rate equal to the
highest of (1) the rate of interest publicly announced by JPMorgan Chase Bank,
N.A. as its prime rate in effect at its principal office in New York City, (2)
the greater of (A) the federal funds effective rate from time to time and (B)
the overnight bank funding rate from time to time, in each case plus 0.5% and
(3) the Adjusted LIBO Rate for a one month interest period plus 1.00%; (ii) an
interest rate equal to the Adjusted LIBO Rate for the applicable interest period
plus a rate ranging from 0.50% to 1.00%, depending on the credit rating of the
Company's senior unsecured long-term debt; or (iii) solely in the case of
swingline loans, another rate agreed to by the applicable Lender and the
applicable Borrower. The Adjusted LIBO Rate is a rate determined by reference to
the rate payable on deposits in the relevant currency in the London interbank
market. Currently, the Company's senior unsecured long-term debt is rated A2 by
Moody's Investors Service, Inc. and A+ by Standard & Poor's Financial Services
LLC, which would result in a rate of the Adjusted LIBO Rate plus 0.75% under
(ii) above. Credit ratings are not recommendations to buy and are subject to
change, and each rating should be evaluated independently of any other rating.
In addition, the Company undertakes no obligation to update disclosures
concerning its credit ratings, whether as a result of new information, future
events or otherwise.
The New Credit Agreement contains customary financial and other covenants.
There are no material relationships between the Company or its affiliates and
any of the Lenders, other than in connection with the New Credit Agreement and
the Company's existing $1.75 billion Amended and Restated Credit Agreement dated
as of November, 13, 2015 among the Company, certain of its subsidiaries and the
lenders from time to time party thereto. The description of the New Credit
Agreement set forth above is qualified by reference to the 364-Day Credit
Agreement filed herewith as Exhibit 10.1 and incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information included in Item 1.01 above is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) Exhibits. The exhibit listed in the Exhibit Index below is filed as
part of this report.
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