A en route aircraft makes its last approach to the FedEx-Hub in 2019. The company froze share repurchases and dividends in new credit contracts. (Jim Weber/Daily Memphian) FedEx Corp. said on Friday it had amended some existing credit contracts, which would improve the company`s “liquidity and financial flexibility during the ongoing Covid 19 pandemic,” but would also temporarily prevent the company from buying back shares or increasing dividends. In late May 2020, FedEx announced that it had obtained approval from its lenders to amend its revolving credit contracts to allow FedEx to weather the storm. A few months earlier, in March 2020, FedEx announced that it was able to extend the term of its five-year revolving credit line to March 2025 and replace a previous short-term credit facility with a new $364 billion revolving credit line, maturing in March 2021. Here`s what management had to say about FedEx`s cash position at the company`s last quarterly conference call: as announced, FedEx has a five-year, $2.0 billion credit contract expires in March 2025, and a $1.5 billion credit contract with 364 days, which expires in March 2021. On March 18, 2020, as part of our 364-day credit agreement, we informed lenders that we were borrowing $1.5 billion as part of the agreement. We have chosen to withdraw the full amount available under our 364-day credit contract in order to increase our cash position, in order to maintain financial flexibility in the face of disruption to commercial paper markets and the current uncertainty in global financial markets following the Covid-19 pandemic. As of April 3, 2020, we had $1.5 billion under our credit facilities, $136 million in commercial outstandings and $0.3 million in unpaid credit, resulting in $1.86 billion available for future obligations under our existing credit contracts. In May, we amended the credit facilities to provide additional financial flexibility until the end of fiscal year 2021, given the current environment. We ended the year with $4.9 billion in cash and cash equivalents and $3.5 billion in our credit facilities.
” — FedEx CFO The parcel delivery and business services company said the changes include a US$2 billion credit contract and a $1.5 billion credit contract and a 364-day credit contract of $1.5 billion, each dated March 17, 2020. The changes “change the definition of consolidated EBITDA” used in the leverage ratio that fedEx must maintain at the end of each quarter of activity in accordance with credit contracts to exclude non-solvency pension costs, FedEx said, adding that the changes also temporarily increase the leverage ratio. We are taking other steps to manage our cash flow and improve our liquidity, including reviewing and considering opportunities and strategies to reduce and defer capital expenditures, reduce operating costs and take into account alternative sources of financing in addition to our credit facilities and access to public procurement. We introduced temporary surcharges for all international parcel and air cargo shipments and temporarily removed our refund guarantee for all Federal Express Corporation (FedEx Express), FedEx Ground and FedEx Freight Corporation services as well as FedEx Office and Print Services, Inc. on the same day. We are also looking forward to some of the recently adopted and future government program relief provisions, which aim to facilitate the U.S. and global business economy in response to the COVID 19 pandemic, including the exemption of certain excise duties and the deferral of U.S. payroll taxes.