AMETEK has raised its commercial paper ceiling by $1.2bn, to the same figure that caps the paper and the revolver together

A commercial paper programme and the bank line standing behind it now carry the same ceiling, and the filing that raised the first says the two of them share the second.

AMETEK filed an 8-K on Tuesday afternoon reporting that on 7 August it increased the maximum face or principal amount of short term unsecured commercial paper that may be outstanding under its programme, from $2.3bn to $3.5bn. That is $1.2bn more, about 52 percent. All other material terms are unchanged, and the filing says the programme is expected to serve as a flexible source of funding for various purposes, including acquisitions.

Two paragraphs later the same document gives the ceiling. The revolving credit facility is expected to continue as the liquidity backstop for repaying the notes, such that borrowings under the facility and the programme together should not exceed $3.5bn at any time.

So the two caps are now the same number. The paper does not sit on top of the revolver, it competes with it for the same room. Whether that combined figure is new, the 8-K does not say.

The revolver moved first, by the identical pair of numbers

AMETEK's quarterly filing for the period ended 30 June, filed a week ago, carries the other half.

On 9 June the company and certain foreign subsidiaries signed an amended and restated revolving credit agreement, which increased aggregate commitments from $2.3 billion to $3.5 billion and pushed maturity out to 9 June 2031. The same two figures, two months earlier. Alongside it came a term loan agreement of up to $4.0 billion, in tranches of $1.625 billion at three years, $1.625 billion at four, and $750 million at five.

Those two agreements did something else on signature. A $5.0 billion bridge financing commitment, obtained when AMETEK entered the purchase agreement for Indicor, was automatically reduced and terminated in full. The bridge was not free. Second quarter interest expense was $30.1 million against $16.9 million a year earlier, up 78.6 percent, which the filing attributes primarily to $10.0 million of fees on that bridge.

Where the room actually goes

AMETEK announced on 5 May that it had agreed to buy a portfolio of instrumentation businesses from Indicor, LLC in an all cash transaction valued at about $5.0 billion.

The revolver may be used for general corporate purposes, and for up to $1.0 billion of the Indicor consideration. Put that against the 8-K's combined ceiling and the arithmetic is plain: a $1.0 billion draw for the acquisition would leave $2.5 billion of room for commercial paper. Neither document says the company intends to do that.

At 30 June there was $545.0 million of paper outstanding and nothing drawn on the revolver, with available revolver capacity reported at $2,904.2 million. The ceiling less the paper is $2,955.0 million, so $50.8 million is unaccounted for on the face of the filing, which does not explain the gap.