Berkshire Hathaway Inc. (BRKA, BRKB) has lined up an $8 billion credit line as a "potential additional source of funds" to help pay for its $26.3 billion acquisition of railroad company Burlington Northern Santa Fe (BNI), according to a Thursday filing.
In a filing with the Securities and Exchange Commission, Omaha, Nebraska-based investment manager Berkshire Hathaway said it signed the deal with JPMorgan Chase and Wells Fargo on Wednesday. Borrowings under the Credit Agreement, if any, will be made immediately prior to the closing of the transaction.
Earlier, Berkshire had said it "expects to fund about 50% of the total cash consideration of approximately $16 billion with internally generated cash and the remainder with borrowings expected to be repaid over a three-year period."
Warren Buffett's company Berkshire Hathaway said it obtained the $8 billion unsecured credit facility potential only to finance the acquisition of Burlington Northern, and plans to pay back the loan over three years. The company is not under obligation to use the funds.
JPMorgan Chase Bank, a unit of JPMorgan Chase (JPM) will act as administrative agent and Wells Fargo Bank, a unit of Wells Fargo & Co. (WFC) is the syndication agent, the filing said.
Earlier this month, Berkshire said it had agreed to acquire the remaining 77.4% of outstanding shares of Burlington Northern Santa Fe (BNI) that it does not currently own, for $100 per share. The transaction is valued at approximately $44 billion.
Berkshire's cash and stock offer will pay Burlington Northern shareholders $100 per share--60% in cash and 40% in Berkshire Hathaway stock. Subject to shareholders and regulatory approvals, the deal is expected to be completed early next year.
Despite Buffett's aversion to debt and using stocks for acquiring companies, he expressed keen interest in concluding the transaction. He also called the acquisitions an "all-in wager" on the U.S. economy.
BRK-A closed Thursday's regular trading session at $103,895.00 and BNI at $98.08.
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