Sprouts Farmers Market closes $600 million revolving credit facility
Ecolab Inc . (NYSE:ECL), a global leader in water, hygiene, and infection prevention solutions with a market capitalization of $71 billion, has entered into a new $2 billion unsecured revolving credit agreement, extending the maturity of its financial leverage. According to InvestingPro data, the company maintains a strong financial health score of "GOOD," supported by solid profitability metrics and consistent dividend growth. The agreement, signed on Monday, replaces the previous credit facility that was set to mature in April 2026, extending the maturity date to March 2030.
This new credit line, arranged with a consortium of banks and led by Bank of America, N.A., will support Ecolab’s general corporate activities, including share repurchase, debt repayment, and potential acquisitions. The facility allows Ecolab to borrow in multiple currencies, with interest rates linked to various benchmarks depending on the currency, including Term SOFR for U.S. dollars, EURIBOR for Euros, TIBOR for Yen, and overnight SONIA for Sterling. The company’s current debt-to-equity ratio of 0.95 and healthy current ratio of 1.26 suggest prudent balance sheet management.
The facility includes a $100 million subfacility for letters of credit and a $75 million subfacility for swing line loans. Fees associated with this credit facility will vary based on Ecolab’s credit rating, with the facility fee ranging from 0.05% to 0.125% and letter of credit fees from 0.70% to 1.125%.
Ecolab is also required to maintain a minimum interest expense coverage ratio, ensuring the company’s earnings can adequately cover its interest expenses. The agreement includes customary conditions, covenants, and restrictions, such as limitations on liens and subsidiary indebtedness.
The banks involved in the credit facility have existing business relationships with Ecolab, providing various financial services for which they receive standard fees. This new credit agreement is detailed in the 8-K filing made with the SEC and reflects Ecolab’s ongoing financial strategy and commitment to maintaining a strong balance sheet. The information is based on a press release statement.
In other recent news, Ecolab Inc. reported its fourth-quarter 2024 earnings, achieving an earnings per share (EPS) of $1.81, which matched analysts’ forecasts, and revenue slightly exceeded expectations at $4.01 billion. Piper Sandler responded to these results by raising Ecolab’s price target to $310, maintaining an Overweight rating, citing the company’s strong performance and optimistic future projections. Similarly, BMO Capital Markets increased their price target for Ecolab to $305, reiterating an Outperform rating, highlighting the company’s potential for mid-teens EPS growth driven by pricing strategies and innovative platforms. Ecolab also declared a regular quarterly dividend of $0.65 per share, marking the 88th consecutive year of such payments, demonstrating its commitment to returning value to shareholders. Additionally, the company announced the appointment of Michel Doukeris, CEO of AB InBev, to its board, bringing extensive experience in sustainability initiatives. These developments reflect Ecolab’s ongoing efforts to enhance its market position and strategic growth initiatives.
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