| Item 1.01. | Entry into a Material Definitive Agreement. |
On June 29, 2021, The Sherwin-Williams Company (“Sherwin-Williams”), Sherwin-Williams Canada Inc. (“SW Canada”) and Sherwin-Williams Luxembourg S.à r.l. (“SW Luxembourg,” and together with Sherwin-Williams and SW Canada, the “Borrowers”) entered into a new five-year $2 billion Credit Agreement (the “New Credit Agreement”) with the lenders party thereto, the issuing lenders party thereto and Citibank, N.A., as administrative agent (the “Administrative Agent”). The New Credit Agreement provides that the Borrowers may increase the size of the facility, subject to the discretion of each lender to participate in such increase, up to an additional amount of $750 million. The New Credit Agreement provides that the Borrowers may request letters of credit in an amount of up to $250 million. The New Credit Agreement will mature on June 29, 2026 and provides Sherwin-Williams with the right to request that the lenders extend the maturity date for two additional periods of one year each. The New Credit Agreement may be used for general corporate purposes, including to finance working capital requirements.
The New Credit Agreement replaces that certain Credit Agreement, dated as of July 19, 2018 (as amended, restated, supplemented or otherwise modified prior to the date hereof, the “Existing Credit Agreement”), among Sherwin-Williams, SW Canada, SW Luxembourg, Sherwin-Williams UK Holding Limited, the lenders party thereto, the issuing lenders party thereto and Citibank, N.A., as administrative agent. The Existing Credit Agreement was terminated effective June 29, 2021.
The New Credit Agreement contains representations, warranties, covenants and events of default substantially the same as those contained in the Existing Credit Agreement. The New Credit Agreement contains customary events of default, including, but not limited to, payment defaults, breaches of representations and warranties, noncompliance with covenants and bankruptcy related events. If certain of these or other events of default occur, the Administrative Agent may decide to, or lenders with a majority of the outstanding loans or commitments may require the Administrative Agent to, accelerate amounts due under the New Credit Agreement. The New Credit Agreement also contains a financial covenant that provides that Sherwin-Williams’ consolidated leverage ratio (total indebtedness to EBITDA) may not exceed 3.75 as of the last day of any fiscal quarter.
Certain of the lenders, as well as certain of their respective affiliates, have performed and may in the future perform for Sherwin-Williams and its subsidiaries, various commercial banking, investment banking, lending, underwriting, trust services, financial advisory and other financial services, for which they have received and may in the future receive customary fees and expenses.
The foregoing description of the New Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the New Credit Agreement, a copy of which is filed as Exhibit 4.1 to this Current Report on Form 8-K and is incorporated herein by reference.
| Item 1.02. | Termination of a Material Definitive Agreement. |
Effective June 29, 2021, the Existing Credit Agreement was terminated. At the time of termination, there were no outstanding borrowings. The information described in Item 1.01 above relating to the Existing Credit Agreement is incorporated herein by reference into this Item 1.02.
| Item 2.03. | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information described in Item 1.01 above relating to the New Credit Agreement is incorporated herein by reference into this Item 2.03.
