Cummins enters 364-day loans for $2 billion, amends five-year loan

By Marisa Wong

Los Angeles, Aug. 19 – Cummins Inc. entered into a fourth amended and restated 364-day credit agreement on Aug. 17 with JPMorgan Chase Bank, NA as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

The credit agreement provides for revolving and swingline loans in an amount up to $1.5 billion in the aggregate outstanding at any time prior to Aug. 16, 2023.

The credit agreement amends and restates the company’s third amended and restated 364-day credit agreement dated Aug. 18, 2021 with JPMorgan as administrative agent.

On Aug. 17, the company also entered into an incremental 364-day credit agreement with JPMorgan as administrative agent.

Under the incremental credit agreement, the borrowers may obtain revolving loans in an amount up to $500 million in the aggregate.

In connection with the new credit agreements, the company also entered into an amendment on Aug. 17 to its amended and restated credit agreement dated Aug. 18, 2021 with JPMorgan as administrative agent to, among other things, replace Libor with SOFR as an interest rate benchmark and to make other conforming changes to interest rate determinations.

Loan details

Borrowings under the new credit agreements 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 agreements.

The company may from time to time request incremental term loans or increase the maximum availability under the restated 364-day credit agreement by up to $750 million if certain conditions are met.

In addition, prior to the commitment termination date, the company may elect to convert all or a ratable portion of the outstanding revolving loans under either new credit agreement into term loans that will mature on the first anniversary of the commitment termination date.

The borrowers will pay a fee to the applicable lenders equal to 0.5% of the aggregate principal amount of the outstanding revolving loans converted into term loans under the term-out option.

Borrowings under all three credit agreements will bear interest at adjusted term SOFR or adjusted Euribor plus a spread based on the company’s senior unsecured long-term debt ratings. The applicable rate ranges from 50 basis points to 100 bps for the five-year credit agreement and 45 bps to 87.5 bps for the two new 364-day credit agreements. Based on current ratings, the applicable rates are 75 bps and 62.5 bps, respectively.

The new credit agreements include a financial covenant requiring that the ratio of consolidated net debt to consolidated total capital as of the last day of each fiscal quarter not be greater than 0.65 to 1.

The joint bookrunners and joint lead arrangers for the new 364-day credit agreements are JPMorgan, BofA Securities, Inc., Citibank, NA, HSBC Securities (USA) Inc. and ING Bank NV, Dublin Branch.

Bank of America, NA is the syndication agent.

Citibank, HSBC Bank USA, NA and ING are the documentation agents.

Cummins is a Columbus, Ind.-based company that designs, manufactures and distributes engines, filtration, and power generation products.

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