Werner Enterprises Refinances Into A $1.1 Billion Credit Facility Maturing In October 2031
The new unsecured facility replaces a $1.075 billion one and drops a 0.10% rate add-on, with $465 million drawn on day one.
Werner Enterprises entered a $1.1 billion unsecured credit facility on October 5, replacing a $1.075 billion facility dated December 20, 2022, according to an 8-K filed Thursday. The company drew $465 million that day at a weighted average rate of 5.54%.
What the 8-K says
The new agreement matures October 5, 2031. The old one was scheduled to mature December 20, 2027, and Werner paid it off and terminated it the same day.
The $465 million draw carries a rate of the Secured Overnight Financing Rate (SOFR, a benchmark borrowing rate) plus a 1.50% margin. Of that, $431.7 million went to pay the $428 million then outstanding under the old facility, plus accrued interest and fees.
The 0.10% credit adjustment spread that the 2022 agreement added to SOFR was eliminated. The $100 million cap on letters of credit and the $100 million swingline (short-term loan) limit are unchanged. BMO Bank, N.A. is administrative agent; BMO Capital Markets, Wells Fargo Securities and TD Securities are joint lead arrangers.
There are no scheduled principal payments before maturity. Proceeds may also be used for working capital, capital spending, permitted acquisitions and general corporate purposes.
What it changes for the balance sheet
Total debt stood at $840 million on October 5: the $465 million of revolving loans plus $375 million under a separate Loan Security Agreement. After $31.9 million of standby letters of credit, remaining borrowing capacity is $603.1 million.
Pricing now floats with leverage. Term SOFR loans carry a margin of 1.125% to 1.750%, base-rate loans 0.125% to 0.750%, and the unused-commitment fee runs 0.125% to 0.250% a year. Those tiers depend on the ratio of net funded debt to covenant-defined EBITDA (earnings before interest, taxes, depreciation and amortization).
What to watch
Two financial covenants apply: a ceiling on net funded debt to Covenant Defined EBITDA, and a floor on that EBITDA to interest expense. A breach could be a default, letting lenders stop lending, demand immediate repayment and require cash collateral for outstanding letters of credit.
The full credit agreement is filed as Exhibit 10.1 to the 8-K, which Chief Financial Officer Christopher D. Wikoff signed on October 8.
Sources
- 8-K Filing — WERNER ENTERPRISES INC (WERN) — SEC EDGAR
