UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
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| Item 1.01. | Entry into a Material Definitive Agreement. |
5-Year Revolving Credit Facility
On September 11, 2019, PayPal Holdings, Inc., as borrower (the “Company”), entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., J.P. Morgan Securities Australia Limited, JPMorgan Chase Bank, N.A., Toronto Branch, and J.P. Morgan Europe Limited, as the Administrative Agents, and the lenders party thereto.
The Credit Agreement provides for an unsecured $5.0 billion five-year revolving credit facility that includes a $150 million letter of credit sub-facility and a $500 million swingline sub-facility, with available borrowings under the revolving credit facility reduced by the amount of any letters of credit and swingline borrowings outstanding from time to time. Loans borrowed under the Credit Agreement are available in U.S. dollars, euros, pounds sterling, Canadian dollars and Australian dollars, in each case subject to the sub-limits and other limitations provided in the Credit Agreement. The Company may also, subject to the agreement of the applicable lenders and satisfaction of specified conditions, increase the commitments under the revolving credit facility by up to $2.0 billion.
Subject to specified conditions, (i) each of PayPal Australia Pty Limited (the “Australian Borrower”), PayPal Canada Co. (the “Canadian Borrower”), PayPal (Europe) S.à r.l. et Cie, S.C.A. (the “Luxembourg Borrower 1”), PayPal International Treasury Centre S.à r.l. (“Luxembourg Borrower 2” and, together with Luxembourg Borrower 1, the “Luxembourg Borrowers”), and PayPal Pte. Ltd. (the “Singapore Borrower” and, collectively with the Australian Borrower, the Canadian Borrower and the Luxembourg Borrowers, the “Foreign Borrowers”) may become borrowers under the Credit Agreement and (ii) the Company may designate one or more of its other subsidiaries as additional borrowers under the Credit Agreement; provided that in each case the Company guarantees all borrowings and other obligations of any such Foreign Borrowers or other subsidiaries under the Credit Agreement.
Funds borrowed under the Credit Agreement may be used for working capital, capital expenditures, acquisitions and other purposes not in contravention with the Credit Agreement. As of September 11, 2019, no borrowings or letters of credit were outstanding under the Credit Agreement. Accordingly, at September 11, 2019, $5.0 billion of borrowing capacity was available for the purposes permitted by the Credit Agreement.
Loans under the Credit Agreement will bear interest at either (i) the applicable eurocurrency rate plus a margin (based on the Company’s public debt ratings) ranging from 0.875 percent to 1.375 percent, (ii) the applicable overnight rate plus a margin (based on the Company’s public debt ratings) ranging from 0.875 percent to 1.375 percent or (iii) a formula based on the prime rate, the federal funds effective rate or LIBOR plus a margin (based on the Company’s public debt ratings) ranging from zero percent to 0.375 percent. Subject to certain conditions stated in the Credit Agreement, the Company, any Foreign Borrowers that join the Credit Agreement and any subsidiaries designated as additional borrowers may borrow, prepay and reborrow amounts under the revolving credit facility at any time during the term of the Credit Agreement. The Credit Agreement will terminate and all amounts owing thereunder will be due and payable on September 11, 2024, unless (a) the commitments are terminated earlier, either at the request of the Company or, if an event of default occurs, by the lenders (or automatically in the case of certain bankruptcy-related events), or (b) the maturity date is extended upon the request of the Company, subject to the agreement of the lenders. The Credit Agreement contains customary representations, warranties, affirmative and negative covenants, including a financial covenant, events of default and indemnification provisions in favor of the lenders. The negative covenants include restrictions regarding the incurrence of liens and the incurrence of subsidiary indebtedness, in each case subject to certain exceptions. The financial covenant requires the Company to meet a quarterly financial test with respect to a maximum consolidated leverage ratio.
The lenders party to the Credit Agreement and/or their affiliates have from time to time provided, and/or may in the future provide, various financial advisory, commercial banking, investment banking and other services to the Company and its affiliates, for which they received or may receive customary compensation and expense reimbursement.
The foregoing description of the Credit Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Credit Agreement, which is attached hereto as Exhibit 10.1, and is incorporated by reference into this Current Report on Form 8-K.
364-Day Revolving Credit Facility
On September 11, 2019, the Company, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (the “Agent”), entered into a 364-day credit agreement (the “364-Day Credit Agreement”).
The 364-Day Credit Agreement provides for an unsecured $1.0 billion 364-day revolving credit facility. Subject to specified conditions, the Company may designate one or more of its subsidiaries as additional borrowers under the 364-Day Credit Agreement provided that the Company guarantees all borrowings and other obligations of any such designated subsidiaries under the 364-Day Credit Agreement.
Funds borrowed under the 364-Day Credit Agreement may be used for working capital, capital expenditures, acquisitions and other purposes not in contravention with the 364-Day Credit Agreement. As of September 11, 2019, no borrowings or letters of credit were outstanding under the 364-Day Credit Agreement. Accordingly, at September 11, 2019, $1.0 billion of borrowing capacity was available for the purposes permitted by the 364-Day Credit Agreement.
Loans under the 364-Day Credit Agreement will bear interest at either (i) LIBOR plus a margin (based on the Company’s public debt ratings) ranging from 0.875 percent to 1.375 percent or (ii) a formula based on the Agent’s prime rate, the NYFRB rate (the greater of the federal funds effective rate and the overnight bank funding rate) or LIBOR plus a margin (based on the Company’s public debt ratings) ranging from zero percent to 0.375 percent. Subject to certain conditions stated in the 364-Day Credit Agreement, the Company and any subsidiaries designated as additional borrowers may borrow, prepay and reborrow amounts under the revolving credit facility at any time during the term of the 364-Day Credit Agreement. The 364-Day Credit Agreement will terminate and all amounts owing thereunder will be due and payable on September 9, 2020, unless the commitments are terminated earlier, either at the request of the Company or, if an event of default occurs, by the lenders (or automatically in the case of certain bankruptcy-related events). The 364-Day Credit Agreement contains customary representations, warranties, affirmative and negative covenants (including a financial covenant), events of default and indemnification provisions in favor of the lenders. The negative covenants include restrictions regarding the incurrence of liens and the incurrence of subsidiary indebtedness, in each case subject to certain exceptions. The financial covenant requires the Company to meet a quarterly financial test with respect to a maximum consolidated leverage ratio.
The lenders party to the 364-Day Credit Agreement and/or their affiliates have from time to time provided, and/or may in the future provide, various financial advisory, commercial banking, investment banking and other services to the Company and its affiliates, for which they received or may receive customary compensation and expense reimbursement.
The foregoing description of the 364-Day Credit Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the 364-Day Credit Agreement, which is attached hereto as Exhibit 10.2, and is incorporated by reference into this Current Report on Form 8-K.
| Item 1.02. | Termination of a Material Definitive Agreement. |
On September 11, 2019, the Company terminated the revolving facility pursuant to that certain Credit and Guarantee Agreement, dated as of July 17, 2015, among the Company, PayPal, Inc. as subsidiary guarantor, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the other parties thereto.
| 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 of this Current Report on Form 8-K is incorporated herein by reference.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits |
| Exhibit Number |
Description of Exhibit | |||
| 10.1 |
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| 10.2 |
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| 104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PayPal Holdings, Inc. | ||||
| (Registrant) | ||||
| Date: September 12, 2019 |
/s/ Brian Y. Yamasaki | |||
| Name: Brian Y. Yamasaki | ||||
| Title: Vice President, Corporate Legal and Secretary |