Cummins gets $2 billion delayed-draw facility for Meritor acquisition

By William Gullotti

Buffalo, N.Y., July 19 – Cummins Inc. entered into a $2 billion delayed-draw term loan agreement with Wells Fargo Bank, NA as administrative agent on July 13, according to an 8-K filing with the Securities and Exchange Commission.

Under the agreement, the company may obtain delayed-draw term loans totaling up to $2 billion in a single transaction prior to Oct. 13.

Facility proceeds will be available for general corporate purposes, including to finance Cummins’ previously reported $3.7 billion acquisition of Meritor Inc.

Borrowings will mature three years after the term loan funding date and will not be secured by liens on any asset of the company or its subsidiaries.

Interest will be SOFR plus a margin ranging from 55 basis points to 85 bps, depending on Cummins’ long-term debt rating. The margin was set at 70 bps at signing, reflecting an A2 rating by Moody’s Investors Service and an A+ rating by S&P Financial Services.

Cummins is required to have a consolidated net debt to consolidated total capital ratio not to exceed 0.65 to 1.0 at the end of each quarter, with said consolidated figures including the company’s subsidiaries.

Wells Fargo Securities, LLC, BofA Securities, Inc. and PNC Capital Markets LLC are the joint bookrunners and joint lead arrangers.

Bank of America, NA and PNC Bank, NA are the syndication agents with Bank of Nova Scotia and U.S. Bank NA serving as documentation agents.

Cummins is a Columbus, Ind.-based company that designs, manufactures, distributes and services diesel and natural gas engines and engine-related component products.

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