Tyson Foods, Inc. (TSN, Financial) has announced a significant financial development with the entry into a new Revolving Credit Agreement, effective April 15, 2025. This agreement, involving several of the company's subsidiaries and JPMorgan Chase Bank, N.A. as the administrative agent, replaces the previous revolving credit agreement established in September 2021. The new agreement increases the company's financial flexibility with aggregate commitments of up to $2.5 billion, maturing on April 15, 2030, and includes options for two one-year extensions and potential incremental commitments of up to $500 million, subject to certain conditions.
The Revolving Credit Agreement offers Tyson Foods the choice of interest rates based on the Term Secured Overnight Financing Rate (Term SOFR) or Daily Simple SOFR, plus an applicable spread, or an alternate base rate (ABR) plus an applicable spread. Additionally, a facility fee will be payable to lenders, determined by the company's corporate credit rating from S&P or Moody's.
Consistent with the previous agreement, the new Revolving Credit Agreement includes covenants that limit subsidiary indebtedness, liens, mergers, consolidations, liquidations, dissolutions, asset sales, and changes in business lines, with certain exceptions. Tyson Foods is also required to maintain a minimum interest expense coverage ratio of at least 3.50 to 1.0, calculated on a trailing four fiscal quarter basis.
This strategic move by Tyson Foods aims to enhance its liquidity and financial flexibility, ensuring the company can effectively manage its capital needs and pursue growth opportunities. The agreement's terms reflect Tyson Foods' strong credit standing and commitment to maintaining a robust financial position.
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