Capital One 1997 Annual Report Download - page 32

In November 1996, the Company entered into a four-year,
$1.7 billion unsecured revolving credit arrangement (the “Credit
Facility”).The Credit Facility is comprised of two tranches: a
$1.375 billion Tranche A facility available to the Bank and the Sav-
ings Bank, including an option for up to $225 million in multi-cur-
rency availability, and a $325 million Tranche B facility available to
the Corporation, the Bank and the Savings Bank, including an
option for up to $100 million in multi-currency availability. Each
tranche under the facility is structured as a four-year commitment
and is available for general corporate purposes.The borrowings of
the Savings Bank are limited to $750 million. All borrowings under
the Credit Facility are based on varying terms of LIBOR.The Bank
has irrevocably undertaken to honor any demand by the lenders to
repay any borrowings which are due and payable by the Savings
Bank but which have not been paid. Any borrowings under the
Credit Facility will mature on November 24, 2000; however, the final
maturity of each tranche may be extended for three additional one-
year periods. As of December 31, 1997 and 1996, the Company had
no outstandings under the Credit Facility.The unused commitment is
available as funding needs arise.
In August 1997, the Company entered into a three-year, $350
million equivalent unsecured revolving credit arrangement (the
“UK/Canada Facility”), which will be used to finance the Com-
pany’s expansion in the United Kingdom and Canada.The
UK/Canada Facility is comprised of two tranches: a Tranche A
facility in the amount of £156.5 million ($249.8 million equivalent
based on the exchange rate at closing) and a Tranche B facility
in the amount of C$139.6 million ($100.2 million equivalent based
on the exchange rate at closing). An amount of £34.6 million or
C$76.9 million ($55.2 million equivalent based on the exchange
rates at closing) may be transferred between the Tranche A facility
and the Tranche B facility, respectively, upon the request of the
Company. All borrowings under the UK/Canada Facility are based
on varying terms of LIBOR. Each tranche under the facility is struc-
tured as a three-year commitment and will be available for general
corporate purposes.The Corporation serves as the guarantor of all
borrowings under the UK/Canada Facility. As of December 31, 1997,
the Company had no outstandings under the UK/Canada Facility.
In April 1997, the Bank increased the aggregate amount of bank
notes available under its bank note program. Under the program,
the Bank from time to time may issue up to $7.8 billion of senior
bank notes with maturities from thirty days to thirty years and up
to $200 million of subordinated bank notes (none issued as of
December 31, 1997) with maturities from five to thirty years. As of
December 31, 1997, the Company had $3.2 billion in senior bank
notes outstanding, a 10% decrease from $3.6 billion outstanding as
of December 31, 1996. As of December 31, 1997, bank notes issued
totaling $2.1 billion have fixed interest rates and mature from one
to five years.The Company has entered into interest rate swap
agreements (“swaps”) to effectively convert fixed rates on senior
notes to variable rates which match the variable rates earned on
consumer loans (see “Interest Rate Sensitivity”).
In October 1997, the Bank established a program for the
issuance of debt instruments to be offered outside of the United
States. Under this program, the Bank from time to time may issue
instruments in the aggregate principal amount of $1.0 billion equiv-
alent outstanding at any one time (none issued as of December 31,
1997). Instruments under this program may be denominated in any
currency or currencies.
In September 1996, the Corporation filed a $200 million shelf
registration statement ($125 million of senior debt securities issued
as of December 31, 1997) with the Securities and Exchange Com-
mission (the “SEC”) under which the Corporation from time to
time may offer and sell (i) senior or subordinated debt securities
consisting of debentures, notes and/or other unsecured evidences,
(ii) preferred stock, which may be issued in the form of depository
shares evidenced by depository receipts and (iii) common stock.The
securities will be limited to $200 million aggregate public offering
price or its equivalent (based on the applicable exchange rate at the
time of sale) in one or more foreign currencies, currency units or
composite currencies as shall be designated by the Corporation.
In April 1996, the Bank established a deposit note program
under which the Bank from time to time may issue up to $2.0 billion
of deposit notes with maturities from thirty days to thirty years. As
of December 31, 1997, the Company had $300 million in deposit
notes outstanding.
In January 1997, Capital One Capital I, a subsidiary of the Bank
created as a Delaware statutory business trust, issued $100 million
aggregate amount of Floating Rate Junior Subordinated Capital
Income Securities that mature on February 1, 2027.The securities
represent a preferred beneficial interest in the assets of the trust
and qualify as Tier 1 capital at the Corporation and Tier 2 capital at
the Bank.The net proceeds of the offering of $97.4 million were lent
to the Bank for general corporate purposes. As of December 31,
1997, the interest rate on these securities was 7.30%.
PAGE 30