Item 1.01 Entry into a Material Definitive Agreement.
On January 3, 2020, Lowe’s Companies, Inc. (the “Company”) entered into a $1 billion unsecured 364-day term loan facility (the “Term Loan”) with Wells Fargo Bank, National Association (the “Lender”). Capitalized terms used but not defined herein have the meanings ascribed to such terms in the Term Loan.
The Company may request up to three (3) draws (each, an “Advance”) under the Term Loan in U.S. Dollars. Each Advance shall be in a principal amount of at least $100,000,000.00 or a whole multiple of $100,000,000.00 in excess thereof. The Company must repay the aggregate principal amount of loans outstanding under the Term Loan on the Maturity Date in effect at such time (currently December 31, 2020).
Borrowings under the Term Loan will bear interest, at the Company’s option, calculated according to a Base Rate or a Eurocurrency Rate, as the case may be, plus an Applicable Rate. The Applicable Rate on a Base Rate Loan is 0.000%, and the Applicable Rate on a Eurocurrency Rate Loan is 0.625%.
In addition, in the event that the funding of the full principal amount of the Term Loan does not occur on or before January 31, 2020 (such date, the “Target Date”), the Company shall pay to the Lender an upfront fee in an amount equal to 0.02% of the aggregate principal amount of each Advance occurring after the Target Date.
The Term Loan contains customary representations, warranties and covenants for a transaction of this type, including a financial covenant concerning the ratio of Consolidated Adjusted Funded Debt to Consolidated EBITDAR, as set forth in the 364-Day Credit Agreement dated as of September 9, 2019 and incorporated by reference to the Term Loan. The Term Loan requires the Company to maintain at the end of each fiscal quarter a Consolidated Adjusted Funded Debt to Consolidated EBITDAR ratio that does not exceed 4.00 to 1.00.
The Term Loan also contains customary events of default, including a cross-default provision and a change of control provision. In the event of a default, the administrative agent shall, at the request of, or may, with the consent of, the required lenders, declare the obligations under the Term Loan immediately due and payable and the commitments of the lenders may be terminated. For certain events of default relating to insolvency and receivership, the commitments of the lenders are automatically terminated, and all outstanding obligations become due and payable.
The foregoing description of the Term Loan does not purport to be complete and is qualified in its entirety by reference to the full text of the Term Loan, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
Certain lender parties to the Term Loan and certain of their respective affiliates have performed in the past and may from time to time perform in the future, banking, investment banking and other advisory services for the Company and its affiliates for which they have received, and/or will receive, customary fees and expenses.