UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 16, 2009
United Parcel Service, Inc.
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction
of incorporation)
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001-15451
(Commission File Number)
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58-2480149
(IRS Employer
Identification No.) |
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55 Glenlake Parkway, N.E., Atlanta, Georgia
(Address of principal executive offices)
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30328
(Zip Code) |
Registrant’s telephone number, including area code (404) 828-6000
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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| Item 1.01. |
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Entry into a Material Definitive Agreement. |
The information included pursuant to Item 2.03 is incorporated under this Item 1.01.
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| Item 1.02. |
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Termination of a Material Definitive Agreement. |
On April 16, 2009, United Parcel Service, Inc. (“we”, “us” or “our”) entered into the new credit
facility described in Item 2.03 hereof, replacing the $4.5 billion 364-day revolving credit
facility, dated as of April 17, 2008, with the banks, financial institutions and other
institutional lenders signatory thereto, and Citibank, N.A as administrative agent (which credit
facility was scheduled to expire, unless renewed or converted to a term loan, on April 16, 2009).
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| Item 2.03. |
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Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet
Arrangement of a Registrant. |
On April 16, 2009, we entered into a new $3.0 billion 364-day revolving credit facility (the
“364-Day Facility”) with a syndicate of commercial banks, including Citibank, N.A. as
administrative agent (“Citibank” or the “Agent”). The material terms and conditions of the 364-Day
Facility are as set forth below.
Generally, amounts outstanding under the 364-Day Facility as U.S. Dollar advances bear interest
either at a periodic fixed rate of interest equal to LIBOR for U.S. Dollar deposits for the
applicable interest period of one, two, three, six or, subject to availability from the lenders,
nine or twelve months, plus an applicable margin, or at a fluctuating rate of interest equal to
Citibank, N.A.’s publicly announced base rate, plus an applicable margin, in each case as selected
by us. Amounts outstanding under the 364-Day Facility as non-U.S. Dollar advances bear interest at
a periodic fixed rate of interest equal to LIBOR for deposits in the applicable currency for the
selected interest period, plus an applicable margin. In each case, the applicable margin for
advances bearing interest based on LIBOR is a percentage determined by quotations from Markit Group
Ltd. for our 1-year credit default swap spread, subject to certain minimum rates and maximum rates
based on our public debt ratings from Standard & Poor’s Rating Service (“S&P”) and Moody’s
Investors Service (“Moody’s”). If our public debt ratings are A/A2 or above, the minimum
applicable margin is 1.00% and the maximum applicable margin is 2.00%; if our public debt ratings
are lower than A/A2, the minimum applicable margin is 1.50% and the maximum applicable margin is
3.00%. The applicable margin for advances bearing interest based on the base rate is 1.00% below
the applicable margin for LIBOR advances. We are also able to request advances under the 364-Day
Facility based on competitive bids for the applicable interest rate as set forth below. Interest on
advances based on LIBOR is payable at the end of each applicable interest period and, if such
interest period is longer than three months, at the end of each three-month period occurring during
such interest period. Interest on advances based on the base rate is payable quarterly in arrears.
We may request the Agent to solicit competitive bids from the lenders under the 364-Day Facility
for advances with requested maturities of at least seven days. Each of the lenders may bid at its
discretion. We may accept one or more of such bids, provided that the aggregate outstanding
advances on the date of, and after giving effect to, the competitive bid advance do not exceed the
aggregate commitments of all lenders under the 364-Day Facility. Each such competitive bid advance
must be at least $25 million (or the approximate equivalent in any non-U.S. currency for non-U.S.
Dollar advances) and may be increased in multiples of $1.0 million (or the approximate equivalent
in any non-U.S. currency for non-U.S. Dollar advances). While any such borrowing is outstanding, it
will be deemed a usage of the 364-Day Facility with regard to availability thereunder.
The 364-Day Facility will mature and all amounts outstanding thereunder will be due and payable on
April 15, 2010, provided, however, that we may request renewal of the facility for an additional
364-day period or convert all amounts outstanding thereunder into a term loan for a period up to
one year which would mature not later than April 15, 2011. Should we exercise our option to convert
advances under the 364-Day Facility into such a term loan, the amounts outstanding as such term
loan would bear interest based on the applicable LIBOR or base rate as described above, except that
the margin applicable to
advances bearing interest based on LIBOR would be a percentage equal to the maximum applicable margin as set forth
above determined by our public debt ratings in effect from S&P and Moody’s, and the margin
applicable to advances bearing interest based on base rate would be a percentage equal to 1.00%
below such maximum applicable margin for LIBOR advances.
We are required to pay certain fees in connection with the 364-Day Facility. For example, we must
pay to the lenders a fee on their unused commitment amounts at a rate equal to 0.10% per annum (if
our public debt ratings from S&P and Moody’s are A/A2 or above) or 0.15% per annum (if our public
debt ratings are lower than A/A2). This commitment fee is payable quarterly in arrears.
Generally, however, we may permanently reduce the aggregate commitment of such lenders by
terminating any unused amounts under the 364-Day Facility on three business days notice. Such
reductions must be at least $25 million and are subject to certain restrictions. We may also be
required to pay certain fees to the Agent, as we and the Agent may agree on from time-to-time, such
as an annual administration fee and additional administrative fees in connection with competitive
bid advances.
The 364-Day Facility contains customary covenants regarding the preservation and maintenance of our
corporate existence, material compliance with laws, payment of taxes, and maintenance of insurance
and of our properties. The 364-Day Facility also generally restricts us and our subsidiaries from
incurring any secured indebtedness without making provision for indebtedness under the Credit
Facility to be secured equally and ratably with such secured indebtedness, to the extent all such
secured indebtedness would exceed an amount equal to 10% of our consolidated net tangible assets,
and from entering into certain sale-leaseback transactions. Further, the 364-Day Facility restricts
us from transferring all or substantially all of our assets to a third party, and from merging or
consolidating with a third party where we are not the surviving corporation in such transaction.
The 364-Day Facility requires that we maintain a minimum consolidated net worth (excluding
accumulated other comprehensive income or loss) of $5.0 billion on a quarterly basis and at the
time of any borrowings. The 364-Day Facility includes customary events of default, including, but
not limited to, the failure to pay any interest, principal or fees when due, the failure to perform
any covenant or agreement, materially inaccurate or false representations or warranties, insolvency
or bankruptcy, change of control, the occurrence of certain ERISA events, and judgment defaults.
We plan to use the proceeds from the 364-Day Facility for general corporate purposes, including
commercial paper backstop.