UPS inks new $1.5 billion 364-day revolver, $1 billion five-year loan

By Toni Weeks

San Luis Obispo, Calif., March 28 - United Parcel Service, Inc. entered into two new credit facilities on Friday, according to an 8-K filing with the Securities and Exchange Commission.

The facilities replace the company's existing $1.5 billion 364-day revolving credit facility due March 28, 2014 and its $1 billion five-year revolving credit facility due March 29, 2018.

JPMorgan Chase Bank NA is the administrative agent for both the new and old facilities.

$1.5 billion 364-day revolver

The company entered into a new $1.5 billion 364-day revolving credit facility, which bears interest at Libor plus a margin for U.S. dollar advances. For advances in other currencies, the interest rate is Libor for deposits in the applicable currency for the selected interest period plus an applicable margin. The margin, which ranges from 10 basis points to 75 bps, is a percentage rate determined by quotations from Markit Group Ltd. for the company's one-year credit default swap spread. There is also a fee on unused commitments of 2 bps.

The facility will terminate on March 27, 2015 unless the company requests an extension of an additional 364 days. Amounts outstanding under the facility may be converted into a term loan with a maturity of up to one year and an interest rate of Libor plus 75 bps. If UPS opts for conversion, the company will pay an extension fee equal to 0.5% of the outstanding advances at the time of conversion.

$1 billion five-year revolver

UPS also entered into an amended and restated $1 billion five-year revolving credit facility, which bears interest at Libor plus 10 bps to 75 bps. The actual margin is equal to percentage rate determined by quotations from Markit Group Ltd. for the company's CDS spread, interpolated for a period from the date of determination of such CDS spread in connection with a new interest period until the latest maturity date of the five-year facility then in effect, but not less than a period of one year. There is also a fee on unused commitments of 45 bps.

Proceeds of both facilities will be used for working capital and for other general corporate and lawful business purposes.

The package delivery and supply chain management company is based in Atlanta.

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