FedEx enters into $3.5 billion of new five-year, 364-day revolvers

By Sarah Lizee

Olympia, Wash., March 27 – FedEx Corp. entered into a $2 billion five-year revolving credit agreement and a $1.5 billion 364-day revolving credit agreement on March 22, according to an 8-K filing with the Securities and Exchange Commission.

The five-year credit agreement provides for an up to $2 billion multi-currency revolving credit facility and includes a $250 million sub-limit for letters of credit. FedEx may elect to increase the total amount available under the facility to up to a total of $2.5 billion.

The 364-day credit agreement provides for a $1.5 billion unsecured multi-currency revolving credit facility.

Loans under each credit agreement will bear interest at Libor plus a margin based on the company’s senior unsecured non-credit-enhanced long-term debt ratings.

Based on FedEx’s current ratings of BBB from Standard & Poor’s and Baa2 from Moody’s Investors Service, interest is Libor plus 125 basis points.

The applicable commitment fee rate is currently 12.5 bps for the five-year agreement and 10 bps for the 364-day agreement.

JPMorgan Chase Bank, NA, Merrill Lynch, Pierce, Fenner & Smith Inc., Citibank, NA, Bank of Nova Scotia and Wells Fargo Securities, LLC are joint lead arrangers and joint bookrunners for both credit agreements. JPMorgan Chase is administrative agent, Bank of America, NA is syndication agent, and Citibank, Scotiabank and Wells Fargo Bank, NA are co-documentation agents.

The new credit agreements replaced the $2 billion five-year credit agreement dated as of Nov. 13, 2015, which was terminated effective March 22.

Borrowings under the new credit agreements may be used for FedEx’s general corporate purposes, including acquisitions.

As of March 22, FedEx had not made any cash borrowings under the new credit agreements, but rolled over $53,355,644 in outstanding letters of credit issued under the terminated credit agreement into the five-year credit agreement.

The five-year lenders’ and the 364-day lenders’ commitments under the new credit agreements will terminate on March 22, 2024 and March 20, 2020, respectively.

Financial covenants require FedEx to maintain at the end of each fiscal quarter a ratio of consolidated total debt to consolidated EBITDA that does not exceed 3.5 to 1.0.

FedEx is a Memphis-based package and freight transportation company.

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