Southwest Airlines Co. (LUV) filed a Form 8K – Direct or off-Balance Sheet Financial Obligation – with the U.S Securities and Exchange Commission on August 03, 2016.
On August 3, 2016, we entered into a new $1 billion five-year revolving credit facility agreement (the “Revolving Credit Agreement”) with a syndicate of lenders identified in the Revolving Credit Agreement. JPMorgan Chase Bank, N.A. and Citibank, N.A. act as co-administrative agents and JPMorgan Chase Bank, N.A. acts as paying agent under the Revolving Credit Agreement. The Revolving Credit Agreement has an accordion feature that would allow the Company, subject to, among other things, the procurement of incremental commitments, to increase the size of the facility to $1.5 billion.
As of the date hereof, there are no amounts outstanding under the Revolving Credit Agreement. Generally, amounts outstanding under the Revolving Credit Agreement bear interest at interest rates based on either the LIBOR rate (selected by the Company for designated interest periods) or the “alternate base rate” (being the highest of (1) the prime rate, (2) one-month LIBOR plus 1% or (3) the New York Fed Bank Rate, plus 0.5%). The underlying LIBOR rate and “alternate base rate” are each subject to a floor of 0% per annum. The commitments under the Revolving Credit Agreement may also be used by the Company for the issuance by certain of the lenders party thereto of letters of credit for our account. We are required to pay certain fees in connection with the Revolving Credit Agreement. For example, we must pay commitment fees on a quarterly basis in respect of the unutilized portion of the commitments under the Revolving Credit Agreement. Additionally, we are required to pay certain fees to the paying agent for administrative services.
The Revolving Credit Agreement contains customary representations and warranties, covenants and events of default. The Revolving Credit Agreement also requires the Company to maintain a specified ratio of (x) adjusted net income (before interest, taxes, depreciation, amortization and aircraft rental expense) less cash dividends to (y) interest and aircraft rental expense, and to maintain an unencumbered pool of aircraft with a defined value during the term of the Revolving Credit Agreement. Amounts outstanding under the Revolving Credit Agreement may be accelerated upon the occurrence of an event of default.
While the Revolving Credit Agreement is for a term of five years, we have the right, subject to, among other things, the agreement of the facility’s banks to do so, to request up to two times a one-year extension of the facility.
The Revolving Credit Agreement has been filed herewith to provide investors with the agreed upon terms of the transactions described in this Form 8-K. The Revolving Credit Agreement is not intended to be a source of factual, business or operational information about our company or our subsidiaries. The representations, warranties and covenants contained in the Revolving Credit Agreement were made only for purposes of such agreement and as of specific dates, were solely for the benefit of the parties to such agreement, and may be subject to limitations agreed upon by the parties, including being qualified by disclosures for the purpose of allocating contractual risk between the parties instead of establishing matters as facts; and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors or security holders. Accordingly, investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the parties.
The description of the Revolving Credit Agreement in this Item 2.03 is qualified in its entirety by reference to the full text of the Revolving Credit Agreement, a copy of which is attached to this report as Exhibit 10.1. Capitalized terms used but not defined herein have the meanings ascribed to them in the Revolving Credit Agreement.
The full text of this SEC filing can be retrieved at: http://www.sec.gov/Archives/edgar/data/92380/000119312516676282/d223237d8k.htm
Any exhibits and associated documents for this SEC filing can be retrieved at: http://www.sec.gov/Archives/edgar/data/92380/000119312516676282/0001193125-16-676282-index.htm
Public companies must file a Form 8-K, or current report, with the SEC generally within four days of any event that could materially affect a company’s financial position or the value of its shares.
Copyright (c) 2016 Dow Jones & Company, Inc.