Item 1.01 Entry Into a Material Definitive Agreement
Amendments to the Credit Agreement
On April 24, 2023, TechnipFMC plc (the “Company”) entered into a fifth amendment (the “Amendment No. 5”) to its credit agreement dated February 16, 2021 (as amended from time to time) providing for a senior secured multicurrency revolving credit facility (the “Existing Credit Facility” and as amended, the “Credit Agreement”). Capitalized terms used in this Form 8-K but not defined have the meaning provided in Amendment No. 5.
The Amendment No. 5 increases the commitments available to the Company under the Credit Agreement to $1,250,000,000 and extends the term of the Credit Agreement to five years from the date of the Amendment No. 5. The Credit Agreement also provides for a $250,000,000 letter of credit sub-facility.
Borrowings under the revolving credit facility bear interest at the following rates, plus an applicable margin, depending on currency:
| | • | | U.S. dollar denominated loans bear interest, at the higher of the prime rate last quoted by The Wall Street Journal in the U.S. as the prime rate in effect, an adjusted rate linked to the New York Federal Reserve Bank rate from time to time or an adjusted rate linked to the Term SOFR Rate for one month interest period; |
| | • | | Sterling denominated loans bear interest at Adjusted Daily Simple SONIA Rate; and |
| | • | | Euro denominated loans bear interest on adjusted rate linked to the Euro interbank offered rate. |
The applicable margin for borrowings under the revolving credit facility ranges from 2.50% to 3.50% for Euro and Sterling loans and 1.50% to 2.50% for U.S. dollar loans, depending on a total leverage ratio. The Credit Agreement is subject to customary representations and warranties, covenants, events of default, mandatory repayment provisions and financial covenants.
Upon the occurrence of an Investment Grade Debt Rating by any two of three Rating Agencies and the satisfaction of certain other conditions precedent, the collateral securing the Credit Agreement and the guarantees provided by certain subsidiaries of the Company shall be automatically released and certain negative covenants will no longer apply to the Company.
Performance Letter of Credit Facility
On April 24, 2023, the Company entered into a new $500,000,000 five-year senior secured performance letters of credit facility (the “Performance LC Credit Agreement”). The commitments under the Performance LC Credit Agreement may be increased to $1,000,000,000, subject to the satisfaction of certain customary conditions precedent related to the increase in commitments.
The Performance LC Credit Agreement permits the Company and its subsidiaries to have access to performance letters of credit denominated in a variety of currencies to support the contracting activities of the Company and its subsidiaries with counterparties that require or request a performance guarantee or similar.
The Performance LC Credit Agreement contains substantially the same customary representations and warranties, covenants, events of default, mandatory repayment provisions and financial covenants as the Credit Agreement and benefits from the same guarantees and security as the Credit Agreement on a pari passu basis.
Upon the occurrence of an Investment Grade Debt Rating by any two of three Rating Agencies and the satisfaction of certain other conditions precedent, the collateral securing the Performance LC Credit Agreement and the guarantees provided by certain subsidiaries of the Company shall be automatically released and certain negative covenants therein will no longer apply to the Company.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
The information set forth in Item 1.01 is hereby incorporated into this Item 2.03 by reference.
