Item 1.01 Entry into a
Material Definitive Agreement
On February 8, 2017, The
Clorox Company (the Company) entered into a $1,100,000,000 five-year unsecured
revolving credit agreement (the Agreement) among JPMorgan Chase Bank, N.A.,
Citibank, N.A., and Wells Fargo Bank, National Association, as administrative
agents, and lenders, and the other agents and lenders party thereto. JPMorgan
Chase Bank, N.A., Citigroup Global Markets Inc., and Wells Fargo Securities, LLC
acted as the joint lead arrangers and joint bookrunners under the Agreement.
Citibank, N.A. is also acting as the servicing agent under the Agreement.
Amounts available under the Agreement are for general corporate
purposes.
Concurrently with the
effectiveness of the Agreement, the Company terminated its existing
$1,100,000,000 credit agreement, dated as of October 1, 2014, among the Company,
as borrower, Citibank, N.A., JPMorgan Chase Bank, N.A., and Wells Fargo Bank,
National Association, as administrative agents and lenders, and the other agents
and lenders from time to time party thereto. No material termination fees or
penalties were incurred by the Company in connection with the termination of the
existing credit agreement, which was due to mature on October 1,
2019.
Certain lenders party to the
Agreement, directly or through affiliates, have pre-existing relationships with
the Company, including one or more of the following: participating in prior
credit facilities, share repurchase programs, bond offerings, or derivative
transactions; acting as dealers in the Companys commercial paper programs or as
foreign exchange traders; or providing commercial paper safekeeping, investment
banking advisory, cash management, or pension services.
The Agreement provides the
terms under which the lenders will lend funds to the Company and contains
customary representations and warranties and customary affirmative and negative
covenants, including (among others) restrictions on liens, consolidations,
mergers, and asset sales. The only financial covenant in the Agreement is a
consolidated interest coverage ratio. The Agreement also provides for customary
events of default, including (among others) nonpayment, covenant defaults,
breaches of representations or warranties, bankruptcy and insolvency events,
cross defaults and a change of control.
The Company has the option to
elect one of two methods for calculating the interest due on borrowings (other
than letters of credit) under the Agreement:
(A) the base rate, equal to
the highest of (i) the rate set by Citibank, N.A. and publicly announced from
time to time as its base rate, (ii) the sum of one half of one percent plus the
federal funds rate, and (iii) the ICE Benchmark Administration Settlement Rate
applicable to U.S. dollars for a period of one month (One Month LIBOR) plus
one percent (provided that if One Month LIBOR is less than zero, such rate shall
be deemed to be zero), in each case plus an applicable margin depending on the
credit rating assigned to the debt under the Agreement or, if none, the credit
rating assigned to the senior unsecured long-term debt securities of the Company
(the Credit Rating);
or (B) a rate equal to the
London Interbank Offered Rate, or LIBOR, plus an applicable margin depending on
the Credit Rating.
The Company is required to pay
a quarterly facility fee, which varies depending on the Credit Rating. Letters
of credit issued under the Agreement are subject to a letter of credit fee
(which varies depending on the Credit Rating) and related fronting fees. The
Company may also solicit bids from the lenders for a competitive bid borrowing.
The foregoing description of
the Agreement does not purport to be complete and is qualified in its entirety
by reference to the Agreement, a copy of which is attached hereto as Exhibit
10.1 and incorporated herein by reference.