ITEM 1.01
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Entry into a Material Definitive Agreement.
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On November 17, 2020, AT&T Inc. (the “Company”) entered into a $7.5 billion Amended and Restated Credit Agreement (the “2025 Credit Agreement”), with Citibank, N.A., as agent, amending and restating the Company’s existing $7.5 billion Amended and Restated Credit Agreement, dated as of December 11, 2018. On November 17, 2020, the Company also entered into the first amendment (the “Amendment”) to the $7.5 billion Five Year Credit Agreement, dated as of December 11, 2018, with Citibank, N.A., as agent (as amended by the Amendment, the “2023 Credit Agreement” and, together with the 2025 Credit Agreement, the “Revolving Credit Agreements”).
In the event advances are made under either of the Revolving Credit Agreements, those advances would be used for general corporate purposes.
Advances under each of the Revolving Credit Agreements will bear interest, at the Company’s option, either:
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at a variable annual rate equal to: (1) the highest of (but not less than zero) (a) the rate of interest announced publicly by Citibank in New York, New York, from time to time, as Citibank’s base rate, (b) 0.5% per annum above the federal funds rate, and (c) the London interbank offered rate (or the successor thereto) (“LIBOR”) applicable to dollars for a period of one month plus 1.00%, plus (2) an applicable margin, as set forth in the applicable Revolving Credit Agreement (the “Applicable Margin for Base Advances”); or
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at a rate equal to: (i) LIBOR (adjusted upwards to reflect any bank reserve costs) for a period of one, two, three or six months, as applicable, plus (ii) an applicable margin, as set forth in the applicable Revolving Credit Agreement (the “Applicable Margin for Eurodollar Rate Advances”).
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The Applicable Margin for Eurodollar Rate Advances under each of the Revolving Credit Agreements will be equal to 0.680%, 0.920%, 1.025% or 1.125% per annum depending on the Company’s unsecured long-term debt ratings. The Applicable Margin for Base Advances will be equal to the greater of (x) 0.00% and (y) the relevant Applicable Margin for Eurodollar Rate Advances minus 1.00% per annum, depending on the Company’s unsecured long-term debt ratings.
The Company will also pay a facility fee of 0.070%, 0.080%, 0.100% or 0.125% per annum of the amount of lender commitments, depending on the Company’s unsecured long-term debt ratings.
As of the date of this filing, the Company’s unsecured long-term debt is rated BBB by S&P, Baa2 by Moody’s and A- by Fitch, and, accordingly, the Applicable Margin for Eurodollar Rate Advances at this time is 1.025% and the facility fee applicable at this time is 0.100%. S&P, Moody’s and Fitch may change their ratings at any time, and the Company disclaims any obligation to provide notice of any changes to these ratings.
In the event that the Company’s unsecured long-term debt ratings are split by S&P, Moody’s and Fitch, then the Applicable Margin for Eurodollar Rate Advances, the Applicable Margin for Base Advances or the facility fee, as the case may be, will be determined by the highest of the three ratings, except that in the event the lowest of such ratings is more than one level below the highest of such ratings, then the Applicable Margin for Eurodollar Rate Advances, the Applicable Margin for Base Advances or the facility fee, as the case may be, will be determined based on the level that is one level above the lowest of such ratings.
The obligations of the lenders under the 2025 Credit Agreement to provide advances to the Company will terminate on November 17, 2025, unless the commitments are terminated in whole prior to that date. The obligations of the lenders under the 2023 Agreement to provide advances to the Company will terminate on December 11, 2023, unless the commitments are terminated in whole prior to that date. All advances must be repaid no later than the date on which lenders are no longer obligated to make any advances under the applicable Revolving Credit Agreement.
Each of the Revolving Credit Agreements provides that the Company and lenders representing more than 50% of the facility amount may agree to extend their commitments under such Revolving Credit Agreement for two one-year periods beyond the initial termination date. The Company has the right to terminate, in whole or in part, amounts committed by the lenders under each of the Revolving Credit Agreements in excess of any outstanding advances; however, any such terminated commitments may not be reinstated.
The Revolving Credit Agreements also provide that the Company may request that the aggregate amount of the commitments of the lenders under either Revolving Credit Agreement be increased by an integral multiple of $25 million to be effective as of a date that is at least 90 days prior to the scheduled termination date then in effect, provided that in no event shall the aggregate amount of the commitments of the lenders under both Revolving Credit Agreements at any time exceed $17 billion.
The Revolving Credit Agreements contain certain representations and warranties and covenants, including a limitation on liens covenant and, beginning in the first full fiscal quarter ending after the closing date, a net debt-to-EBITDA financial ratio covenant that the Company will maintain, as of the last day of each fiscal quarter, a ratio of not more than 3.5 to 1 of:
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(A)
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all items that would be treated under accounting principles generally accepted in the United States (“GAAP”) as specified in the Revolving Credit Agreements as indebtedness on the Company’s consolidated balance sheet minus the amount by which the sum of (i) 100% of unrestricted cash and cash equivalents held by the Company and its subsidiaries in the United States,
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