Item 1.01
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Entry into a Material Definitive Agreement.
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Multiyear and 364-Day Revolving Credit Facilities
On August 27, 2019, Danaher Corporation (“Danaher”) replaced its existing $4.0 billion unsecured, multiyear revolving credit facility with a second amended and restated $5.0 billion unsecured, multiyear revolving credit facility (the “5-Year Credit Facility”) with Bank of America, N.A., as Administrative Agent, and a syndicate of lenders from time to time party thereto. The 5-Year Credit Facility expires on August 27, 2024, subject to a one-year extension option at the request of Danaher and with the consent of the lenders. The 5-Year Credit Facility also contains an expansion option permitting Danaher to request up to five increases of up to an aggregate additional $2.5 billion from lenders that elect to make such increase available, upon the satisfaction of certain conditions. The description of the Credit Agreement with respect to the 5-Year Credit Facility (the “5-Year Credit Agreement”) set forth herein is qualified in its entirety by reference to the full text of the 5-Year Credit Agreement, a copy of which is attached as Exhibit 10.1 hereto and is incorporated by reference herein.
On August 27, 2019, Danaher also entered into a new $5.0 billion 364-day revolving credit facility (the “364-Day Credit Facility” and, together with the 5-Year Credit Facility, the “Credit Facilities”) with Bank of America, N.A., as Administrative Agent, and a syndicate of lenders from time to time party thereto. The 364-Day Credit Facility expires on August 25, 2020 (the “Scheduled Termination Date”). Danaher may elect, upon the payment of a fee equal to 0.75% of the principal amount of the loans then outstanding and, upon the satisfaction of certain conditions, to convert any loans outstanding on the Scheduled Termination Date into term loans that are due and payable one year following the Scheduled Termination Date. The description of the Credit Agreement with respect to the 364-Day Credit Facility (the “364-Day Credit Agreement” and, together with the 5-Year Credit Agreement, the “Credit Agreements”) set forth herein is qualified in its entirety by reference to the full text of the 364-Day Credit Agreement, a copy of which is attached as Exhibit 10.2 hereto and is incorporated by reference herein.
Borrowings under the 5-Year Credit Facility bear interest as follows: (1) Eurocurrency Rate Committed Loans (as defined in the 5-Year Credit Agreement) bear interest at a variable rate equal to the London inter-bank offered rate plus a margin of between 58.5 and 100.0 basis points, depending on Danaher’s long-term debt credit rating; (2) Base Rate Committed Loans and Swing Line Loans (each as defined in the 5-Year Credit Agreement) bear interest at a variable rate equal to the highest of (a) the Federal funds rate (as published by the Federal Reserve Bank of New York from time to time) plus 1/2 of 1%, (b) Bank of America’s “prime rate” as publicly announced from time to time and (c) the Eurocurrency Rate (as defined in the 5-Year Credit Agreement) plus 1%; and (3) Bid Loans (as defined in the 5-Year Credit Agreement) bear interest at the rate bid by the particular lender providing such loan. In addition, Danaher is required to pay a per annum facility fee of between 4.0 and 12.5 basis points (depending on Danaher’s long-term debt credit rating) based on the aggregate commitments under the 5-Year Credit Facility, regardless of usage.
Borrowings under the 364-Day Credit Facility bear interest as follows: (1) Eurodollar Rate Loans (as defined in the 364-Day Credit Agreement) bear interest at a variable rate per annum equal to the London inter-bank offered rate plus a margin of between 59.5 and 100.5 basis points, depending on Danaher’s long-term debt credit rating; and (2) Base Rate Loans (as defined in the 364-Day Credit Agreement) bear interest at a variable rate per annum equal to the highest of (a) the Federal funds rate (as published by the Federal Reserve Bank of New York from time to time) plus 1/2 of 1%, (b) Bank of America’s “prime rate” as publicly announced from time to time and (c) the Eurodollar Rate (as defined in the 364-Day Credit Agreement) plus 1.0%, plus in each case a margin of up to 0.5 basis points depending on Danaher’s long-term debt credit rating. In addition, Danaher is required to pay a per annum facility fee of between 3.0 and 12.0 basis points (depending on Danaher’s long-term debt credit rating) based on the aggregate commitments under the 364-Day Credit Facility, regardless of usage.
The Credit Facilities require Danaher to maintain a Consolidated Leverage Ratio (as defined in the respective Credit Agreement) of 0.65 to 1.00 or less. Borrowings under the Credit Facilities are prepayable at Danaher’s option at any time in whole or in part without premium or penalty.
Danaher’s obligations under the Credit Facilities are unsecured. Danaher has unconditionally and irrevocably guaranteed the obligations of each of its subsidiaries in the event a subsidiary is named a borrower under either Credit Facility. Each Credit Agreement contains customary representations, warranties, conditions precedent, events of default, indemnities and affirmative and negative covenants, including covenants that, among other things, restrict the ability of Danaher and certain of its subsidiaries (excluding Envista Holdings Corporation and its subsidiaries) to: incur liens; sell or otherwise dispose of all or substantially all of Danaher’s or any subsidiary borrower’s assets; enter into certain mergers or consolidations; and use proceeds of borrowings under the Credit Facilities for other than permitted uses. These covenants are subject to a number of important exceptions and qualifications. Certain changes of control with respect to Danaher would constitute an event of default under the Credit Facilities. Upon the occurrence and during the continuance of an event of default, the lenders may declare the outstanding advances and all other obligations under the Credit Agreements immediately due and payable.
Danaher intends to use the Credit Facilities for liquidity support for Danaher’s expanded U.S. and Euro commercial paper programs and for general corporate purposes. Danaher intends to use proceeds from the issuance of short-term commercial paper notes to fund a portion of the purchase price for the pending acquisition of the Biopharma Business of GE Life Sciences.