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Valero Energy Corporation (NYSE:VLO), a prominent player in the Oil, Gas & Consumable Fuels industry with a market capitalization of $48.7 billion, announced Thursday that it has amended and restated its revolving credit agreement, extending the maturity date from November 22, 2027, to October 16, 2030. According to InvestingPro analysis, the company is currently trading near its Fair Value, with strong financial health metrics supporting its credit position. The updated facility, arranged with JPMorgan Chase Bank, N.A. as administrative agent and several other financial institutions, maintains an aggregate principal amount of up to $4 billion, with a letter of credit subfacility of up to $2.4 billion. This facility enhancement aligns with the company’s prudent financial management, as evidenced by its healthy current ratio of 1.62 and moderate debt-to-equity ratio of 0.44, according to InvestingPro data.
According to the company’s press release statement, the revolving commitments under the credit facility may be increased by up to $1.5 billion, bringing the total possible commitment to $5.5 billion.
Borrowings under the facility will bear interest at either the Term SOFR Rate plus a margin ranging from 0.9% to 1.5% per annum, or the Alternate Base Rate plus a margin ranging from 0.0% to 0.5% per annum. The applicable margin is determined by Valero’s credit ratings from S&P, Moody’s, and Fitch.
The agreement also requires Valero to pay a commitment fee on the daily amount of used and unused commitments, with rates ranging from 0.1% to 0.25% per annum, also based on the company’s credit ratings. Interest and commitment fees are payable quarterly in arrears or on a shorter schedule if the interest period selected is less than three months. Additional customary fees, including letter of credit participation, fronting fees, and an agency fee, are also required.
The credit facility includes standard affirmative and negative covenants and events of default. Proceeds from the facility are intended for general corporate purposes.
This information is based on a statement from Valero Energy’s recent SEC filing.
In other recent news, Valero Energy has experienced several notable developments. Piper Sandler raised its price target for Valero Energy to $200, citing strong margins and widening differentials as key factors. Additionally, UBS increased its price target to $183, maintaining a Buy rating due to a decline in Russian refined product exports. Meanwhile, BofA Securities upgraded Valero Energy from Neutral to Buy, raising its price target to $179, driven by a positive outlook on crude spreads. In contrast, Morgan Stanley downgraded Valero Energy from Overweight to Equalweight, although it raised its price target to $175 following the company’s significant rally in the third quarter.
In corporate governance news, Valero Energy appointed Robert L. Reymond as an independent director on its board. Reymond will also join the Nominating and Corporate Governance Committee, bringing experience from his previous role as Chief Operating Officer at Burns & McDonnell, Inc. These recent developments highlight a mix of strategic upgrades and corporate leadership changes for Valero Energy.
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