Fitch assigns A rating to K-C's new US$1.5B, five-year and US$500M, 364 day revolving credit facilities; outlook stable

Michelle Rivera

NEW YORK , October 17, 2011 (press release) – Fitch Ratings assigns an 'A' rating to Kimberly-Clark Corp.'s (Kimberly) new $1.5 billion, five year and $500 million, 364 day revolving credit facilities. These facilities will be used for general corporate purposes. Total commitments can be increased by an aggregate $500 million and the termination date on the fifth year can be extended by an additional period of one year on each of the first two anniversaries. Any extension of commitments would be at each lenders' sole discretion. There is no substantive change from the previous agreement. The only financial covenant is to maintain shareholder equity balances of at least $2.3 billion which is unchanged.

Kimberly's 'A'/'F1' ratings were affirmed on Oct. 6, 2011. The Rating Outlook is Stable.

The ratings reflect the company's strong credit protection measures and ability to consistently generate at least $2.3 billion in operating cash flow and over $500 million of free cash flow in each of the past nine years. Additionally, Kimberly has significant scale with over $20 billion in revenues, and leading market shares in a relatively non-cyclical personal products and household care products industry. The company's ability to generate ample levels of free cash flow despite the pressure on margins due to rapid escalations in commodity input costs for much of the past six years is a key strength. Leverage was 2.0 times (x) for the latest 12 months (LTM) period ended June 30, 2011 and FFO interest coverage was 10.7x. Leverage was at the top of Fitch's expectations; however it is expected to be less than 2.0x by year end.

These new facilities totaling $2 billion replace the existing $1.33 billion, five year facility that would have matured in September 2012. European banks comprise approximately 30% of the total commitments in this and the old facility. Fitch views Kimberly closing on these facilities in this environment positively, given current pressures on European banks. Kimberly's liquidity has increased with cash balances of $908 million at June 30, 2011, $2 billion in revolver availability, and strong access to the capital markets. For further details, please see Fitch's press release dated Oct. 7, 2011.

Fitch current rates Kimberly as follows:

--Long-term Issuer Default Rating (IDR) 'A';

--Short-term IDR 'F1';

--Commercial paper (CP) 'F1';

--$200 million dealer remarketable securities 'A' and 'F1';

--$2 billion revolving credit facilities 'A';

--Senior unsecured notes and debentures 'A'.

Fitch also has a Commercial paper (CP) rating on Kimberly-Clark Worldwide, Inc. of 'F1'. CP issued by Kimberly-Clark Worldwide, Inc., is fully guaranteed by KMB.

Additional information is available at ' www.fitchratings.com '. The ratings above were unsolicited and have been provided by Fitch as a service to investors.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' Aug. 12, 2011;

--'French Banks: Under Market Fire' Sept. 29, 2011;

--'Fitch Affirms Kimberly-Clark's IDR at 'A'; Outlook Stable' Oct. 7, 2011.

© 2024 Business Wire, Inc., All rights reserved.