| Item 1.01 | Entry Into a Material Definitive Agreement. |
Revolving Credit Agreements
On June 4, 2021, Humana Inc. (the “Company”) entered into two separate revolving credit facilities: (i) a five-year $2.5 billion unsecured revolving credit agreement with the several banks and other financial institutions from time to time parties thereto, JPMorgan Chase Bank, N.A. as Agent and as CAF Loan Agent, Bank of America, N.A. and Goldman Sachs Bank USA as Syndication Agents, Citibank, N.A., PNC Bank, National Association, U.S. Bank National Association and Wells Fargo Securities, LLC, as Documentation Agents, and JPMorgan Chase Bank, N.A., BofA Securities, Inc., Goldman Sachs Bank USA, Citigroup Global Markets, Inc., PNC Capital Markets LLC, U.S. Bank National Association and Wells Fargo Securities, LLC, as Joint-Lead Arrangers and Joint Bookrunners (the “Amended and Restated Credit Agreement”), which amended and restated the Company’s five-year, $2 billion unsecured revolving credit agreement dated as of May 22, 2017 (as amended, the “Previous Credit Agreement”), and (ii) a 364-day $1.5 billion unsecured revolving credit agreement with the several banks and other financial institutions from time to time parties thereto, JPMorgan Chase Bank, N.A. as Agent and as CAF Loan Agent, Bank of America, N.A. and Goldman Sachs Bank USA as Syndication Agents, Citibank, N.A., PNC Bank, National Association, U.S. Bank National Association and Wells Fargo Securities, LLC, as Documentation Agents, and JPMorgan Chase Bank, N.A., BofA Securities, Inc., Goldman Sachs Bank USA, Citigroup Global Markets, Inc., PNC Capital Markets LLC, U.S. Bank National Association and Wells Fargo Securities, LLC, as Joint-Lead Arrangers and Joint Bookrunners (together with the Amended and Restated Credit Agreement, the “Revolving Credit Agreements”). Proceeds of the Revolving Credit Agreements will be used by the Company for general corporate purposes.
Under the Revolving Credit Agreements, at our option, we can borrow on either a competitive advance basis or a revolving credit basis. The revolving credit portion bears interest at LIBOR or the base rate plus a spread. The competitive advance portion of any borrowings will bear interest at market rates prevailing at the time of borrowing on either a fixed rate or a floating rate based on LIBOR, at our option. The Company will pay an annual facility fee under each Credit Agreement regardless of utilization.
The Revolving Credit Agreements contain customary covenants, including a maximum debt to capitalization financial condition covenant, as well as customary events of default. The terms of the Revolving Credit Agreements also include standard provisions related to conditions of borrowing, including customary representations and warranties. In addition, the Revolving Credit Agreements permit the incurrence up to $750 million of incremental commitments, which amount may be allocated between the Amended and Restated Credit Agreement and the 364-Day Credit Agreement as the Company may elect.
We have other relationships, including financial advisory and banking, with some parties to the Revolving Credit Agreements.
As of June 4, 2021, we have no borrowings and no letters of credit outstanding under the Revolving Credit Agreements. Accordingly, as of June 4, 2021, we have $2.5 billion of remaining borrowing capacity under the Amended and Restated Credit Agreement and $1.5 billion of remaining borrowing capacity under the 364-Day Credit Agreement, none of which would be restricted by our financial covenant compliance requirement.
The foregoing description of the Revolving Credit Agreements does not purport to be complete. For an understanding of the terms and provisions of the Amended and Restated Credit Agreement and the 364-Day Credit Agreement, reference should be made to the copies of those agreements attached as Exhibits 10.1 and 10.2, respectively, to this Form 8-K and incorporated by reference herein.
Delayed Draw Term Loan Credit Agreement
On May 28, 2021, the Company entered into a $500 million delayed draw term loan credit agreement with the several banks and other financial institutions from time to time parties thereto, JPMorgan Chase Bank, N.A. as Agent, Bank of America, N.A. and Goldman Sachs Bank USA as Syndication Agents, Citibank, N.A., PNC Capital Markets LLC, Truist Bank, U.S. Bank, National Association and Wells Fargo Securities, LLC, as Documentation Agents, and Goldman Sachs Bank USA, BofA Securities, Inc., JPMorgan Chase Bank, N.A, Citibank, N.A., PNC Capital Markets LLC, Truist Securities, Inc., U.S. Bank National Association and Wells Fargo Securities, LLC, as Joint-Lead Arrangers and Joint Bookrunners (the “Term Loan Agreement”). Proceeds of the Term Loan Agreement will be used by the Company to fund in part the acquisition of Kindred at Home and related fees and expenses.
