| Item 1.01 | Entry into a Material Definitive Agreement |
Five Year Revolving Credit Facility
On December 14, 2021, Ryder System, Inc. (the “Company”) and certain of its subsidiaries entered into a third amended and restated syndicated global multi-currency revolving credit facility (the “A&R Credit Agreement”) with the financial institutions and other Lenders named therein, including Bank of America, N.A., as Administrative Agent, Royal Bank of Canada, as the Canadian Agent, and a syndicate of banks and financial institutions as Lenders. The A&R Credit Agreement provides for a total revolving loan ability of $1.4 billion and can also be used to issue up to $75 million in letters of credit. Capitalized terms used in this Current Report on Form 8-K that are not defined have the meanings provided in the A&R Credit Agreement.
Amounts borrowed under the A&R Credit Agreement are unsecured. The A&R Credit Agreement is scheduled to mature on December 14, 2026 but may be extended for up to two additional years on terms set forth in the A&R Credit Agreement. The maximum amount of outstanding borrowings and letters of credit permitted at any one time under the A&R Credit Agreement is $1,400,000,000, including borrowings of up to $150,000,000 in Canadian Dollars and up to $100,000,000 in Pounds Sterling and/or Euro. The proceeds of the A&R Credit Agreement are to be used for working capital and other general corporate purposes of the Company and its subsidiaries.
Without limitation, the A&R Credit Agreement modifies the Company’s existing second amended and restated global revolving credit facility dated September 28, 2018, as amended, to extend the maturity from September 28, 2023 to December 14, 2026 and to incorporate interest rate provisions and fallbacks in line with the transition by the syndicated loan market from using LIBOR as an interest rate benchmark to specific risk-free rates.
Borrowings under the A&R Credit Agreement will bear interest at a base rate or the applicable benchmark, plus, in each case, a margin determined with reference to the Company’s credit ratings (the “Applicable Rate”). Based on the Company’s current credit ratings, the Applicable Rate for LIBOR, SONIA, and EURIBOR rate Loans and U.K. Swing Line Loans would be 1.125%, and for Base Rate Loans, Canadian Prime Rate Loans, Domestic Swing Line Loans and Canadian Swing Line Loans, the Applicable Rate would be 0.125%. In addition, the Company is required to pay the lenders a facility fee on the facility amount (whether or not used) at a rate per annum which is based on the Company’s credit ratings (the “Facility Fee”). Based on the Company’s current credit ratings, the Facility Fee will be equal to 0.125%.
The Company has guaranteed the obligations of all subsidiary borrowers under the A&R Credit Agreement. The A&R Credit Agreement contains customary covenants, including covenants applicable to the Company and its subsidiaries limiting the amount of secured indebtedness, liens, substantial asset sales and mergers. Most of these restrictions are subject to certain minimum thresholds and exceptions. The A&R Credit Agreement also contains the following financial covenant: the Company is required to maintain a ratio of (a) the aggregate amount of indebtedness of the Company and its consolidated subsidiaries to (b) consolidated adjusted net worth, not to exceed 3.0 to 1.0.
The A&R Credit Agreement contains no provisions restricting its availability in the event of a material adverse change to the Company’s business operations. The A&R Credit Agreement does include customary events of default which could result in an acceleration or increase in amounts due, including (subject to certain materiality thresholds and grace periods) payment default, failure to comply with covenants, material inaccuracy of representation or warranty, bankruptcy or insolvency proceedings, change of control, ERISA matters and cross-default to other debt agreements.
The Lenders and Agents (and their respective Affiliates) may have provided, and may in the future provide, investment banking, cash management, underwriting, lending, commercial banking, leasing, foreign exchange, trust or other advisory services to the Company and its subsidiaries and affiliates. These parties may have received, and may in the future receive, customary compensation for these services.
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