Baker Hughes enters new $2.5B credit facility

Baker Hughes Inc. announced a new five-year $2.5 billion revolving credit facility to replace its $2.5 billion facility expiring in September.

On July 13, 2016, the oilfield services provider entered into a new credit agreement among the company, as borrower, JPMorgan Chase Bank NA, as administrative agent, Citibank NA, as syndication agent, and other agents and lenders. The Bank of Tokyo-Mitsubishi UFJ, Ltd., DNB Bank ASA, New York Branch, Goldman Sachs Bank USA, HSBC Bank USA, National Association and Wells Fargo Bank, National Association acted as documentation agents, JPMorgan Chase Bank NA and Citigroup Global Markets Inc. acted as co-lead arrangers and joint bookrunners and The Bank of Tokyo-Mitsubishi UFJ Ltd., DNB Markets Inc., Goldman Sachs Bank USA, HSBC Bank USA NA, and Wells Fargo Securities LLC acted as co-arrangers and joint bookrunners. The 2016 credit agreement expires in July 2021. If drawn, proceeds from the 2016 credit agreement are expected to be used for general corporate purposes.

The 2016 Credit Agreement contains certain covenants, which, among other things, require the maintenance of a total debt to total capitalization ratio, restrict certain merger transactions or the sale of all or substantially all of the assets of the company or a significant subsidiary of the company and limit the amount of subsidiary indebtedness. Upon the occurrence of certain events of default, the company’s obligations under the 2016 Credit Agreement may be accelerated. Such events of default include payment defaults to lenders under the 2016 Credit Agreement, covenant defaults and other customary defaults.

In an investors’ note Friday morning, Raymond James analysts said the new facility terms appear “relatively in line with the old facility in terms of capacity.”

There is one financial covenant, the analysts note, “a maximum total debt to cap of 60%, which should not be a concern given Baker Hughes’s current 16% ratio. Bottom Line: We had expected Baker Hughes to replace the facility this year, and had not expected any difficulties given the company’s strong financial position.”

Did You Like this Article? Get All the Energy Industry News Delivered to Your Inbox

Subscribe to an email newsletter today at no cost and receive the latest news and information.

 Subscribe Now

Whitepapers

Making DDoS Mitigation Part of Your Incident Response Plan: Critical Steps and Best Practices

Like a new virulent strain of flu, the impact of a distributed denial of service (DDoS) attack is...

The Multi-Tax Challenge of Managing Excise Tax and Sales Tax

To be able to accurately calculate multiple tax types, companies must be prepared to continually ...

Operational Analytics in the Power Industry

Cloud computing, smart grids, and other technologies are changing transmission and distribution. ...

Maximizing Operational Excellence

In a recent survey conducted by PennEnergy Research, 70% of surveyed energy industry professional...