Motorola Grabs a New Revolver

In a throwback to last year's stumbles, Motorola (MOT) Tuesday renewed a credit line after tweaking some key terms.

The big wireless technology company agreed to take less money on a one-year revolving loan but eased the terms of a key downgrade penalty. The deal comes as Motorola continues to recover from last year's credit squeeze, despite steep losses in various businesses.

Motorola agreed to take a $700 million revolving credit facility, replacing the previous $900 million pact, which was due to expire Thursday. The company says it chose to shrink the credit line because it doesn't expect to expand its commercial paper borrowings beyond the current $500 million. Commercial paper is cheap, short-term debt that is used by big companies to fund daily operations.

In addition, Motorola also negotiated some more breathing room in its credit terms. The Schaumburg, Ill., wireless equipment maker is now allowed a two-notch credit downgrade before a so-called springing lien kicks in.

Previously, a one-notch downgrade would have put Motorola in violation of loan covenants and forced the company to pledge assets as collateral to back up the loan.

Ahead of the news, the stock rose 26 cents, to $8.75.

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