ADVANCED MICRO DEVICES, INC. (NASDAQ:AMD) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement
On June 7, 2019, Advanced Micro Devices, Inc. (the “Company”) entered into an up to $500 million secured revolving credit facility to that certain Credit Agreement, by and among the Company, as borrower, the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent (the “Credit Agreement”), as described in more detail below. As of June 7, 2019, there are no borrowings outstanding under the Credit Agreement.
The Revolving Facility consists of a $500 million, five-year revolving loan facility, including a $50 million swingline subfacility and a $75 million sublimit for letters of credit (the “Revolving Facility”). The Credit Agreement also provides the ability to increase the Revolving Facility or incur incremental term loans or other incremental equivalent debt by an amount, subject to certain customary deductions and limits, not to exceed the sum of (i) $250 million, (ii) the aggregate principal amount of any voluntary prepayments of incremental term loans or certain types of incremental equivalent debt, (iii) permanent optional reductions of the commitments under the Revolving Facility, and (iv) except during a Collateral Release Period (as defined below), additional amounts so long as the Company’s pro forma consolidated secured leverage ratio is no greater than 1.50:1.00. The funding of any such incremental facilities are subject to receipt of lender commitments and satisfaction of customary conditions precedent.
Borrowings under the Revolving Facility bear interest through maturity at a variable rate based upon, at the Company’s option, either the LIBOR rate or the base rate (as customarily defined), plus in each case, an applicable margin. The applicable margin for LIBOR rate loans ranges, based on an applicable total leverage ratio, from 1.00% to 1.75% per annum and the applicable margin for base rate loans ranges, based on an applicable total leverage ratio, from 0.00% to 0.75% per annum. The Company is required to pay a fee which ranges, based on an applicable total leverage ratio, from 0.20% to 0.25% per annum on the undrawn portion available under the Revolving Facility. Additionally, the Company is required to pay variable per annum fees equal to the applicable margin for LIBOR rate loans in respect of outstanding letters of credit.
The Company is required to permanently reduce the commitments under the Revolving Facility by an amount equal to the net cash proceeds of (i) any debt issuances not permitted by the Revolving Facility and (ii) any non-ordinary course assets sales (including insurance or condemnation events), in excess of $250 million, if such net cash proceeds are not reinvested by the Company within twelve months of receipt.
The Company’s obligations under the Credit Agreement are guaranteed by AMD International Sales & Service, Ltd. (“AMDISS”) and any future domestic subsidiaries, subject to certain exceptions. Subject to customary exceptions, the obligations under the Credit Agreement and the guarantees are secured by a lien on substantially all of the Company’s and any guarantor’s property, in each case other than intellectual property.
The collateral and guarantees under the Credit Agreement will be released upon: (i) the Company’s achievement a corporate rating of at least Ba1/BB+/BB+ from at least two of Moody’s Investors Service, Inc., Standard & Poor’s Rating Service and Fitch Ratings, Inc., (ii) the Company having no outstanding secured incremental equivalent debt (or the lenders under such debt shall concurrently release their security interests), (iii) the aggregate outstanding principal amount of all debt owed by non-guarantor subsidiaries of the Company not exceeding ten percent of the consolidated total assets of the Company and its subsidiaries, and (iv) no default or event of default has occurred or is continuing.
The collateral and guarantees under the Credit Agreement and any related guaranty and collateral agreement will be automatically reinstated upon (i) the Company’s corporate rating being less than Ba2/BB/BB from at least two of Moody’s, S&P and Fitch, (ii) the Company ceasing to have a rating from at least one of Moody’s S&P and Fitch, or (iii) the aggregate outstanding principal amount of all debt owed by non-guarantor subsidiaries of the Company exceeds ten percent of the consolidated total assets of the Company and its subsidiaries.
The Credit Agreement contains customary affirmative and negative covenants, as well as a total leverage covenant requiring the Company to maintain a maximum ratio of consolidated funded debt to consolidated EBITDA
of 4.00:1.00 and an interest coverage covenant requiring the Company to maintain a minimum ratio of consolidated EBITDA to consolidated cash interest expense of 3.00:1.00. Each financial term used in the immediately preceding sentence is customarily defined and subject to certain limitations, as more fully defined in the Credit Agreement.
The Credit Agreement also contains customary events of default that include, among others, non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations and warranties, bankruptcy and insolvency events, material judgments, cross defaults to material indebtedness and events constituting a change of control. The occurrence of an event of default could result in the termination of commitments under the Revolving Facility, the declaration that all outstanding loans are immediately due and payable in whole or in part and the requirement of cash collateral deposits in respect of outstanding letters of credit.
The foregoing summary of the Credit Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Credit Agreement, which is filed as Exhibit 10.1 and is incorporated herein by reference.
Item 1.02 Termination of a Material Definitive Agreement
On June 7, 2019, in connection with entering into the Credit Agreement as described above, the Company terminated and repaid in full all outstanding obligations due under that certain Amended and Restated Loan and Security Agreement, dated as of April 14, 2015 (as amended to date), among the Company, AMDISS, ATI Technologies ULC, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
The information set forth under Item 1.01 “Entry into a Material Definitive Agreement” is incorporated into this Item 2.03 by reference.
Item 9.01 Financial Statements and Exhibits.
ADVANCED MICRO DEVICES INC Exhibit
EX-10.1 2 creditagreement-amd2019fin.htm EXHIBIT 10.1 Exhibit EXECUTION VERSIONExhibit 10.1 $500,…
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About ADVANCED MICRO DEVICES, INC. (NASDAQ:AMD)
Advanced Micro Devices, Inc. is a global semiconductor company. The Company is engaged in offering x86 microprocessors, as a standalone central processing unit (CPU) or as incorporated into an accelerated processing unit (APU), chipsets, and discrete graphics processing units (GPUs) for the consumer, commercial and professional graphics markets, and server and embedded CPUs, GPUs and APUs, and semi-custom System-on-Chip (SoC) products and technology for game consoles. It operates in two segments: the Computing and Graphics segment, which includes desktop and notebook processors and chipsets, discrete GPUs and professional graphics, and the Enterprise, Embedded and Semi-Custom segment, which includes server and embedded processors, dense servers, semi-custom SoC products, engineering services and royalties. Its desktop PC product brands for microprocessors are AMD A-Series, AMD E-Series, AMD FX CPU, AMD Athlon CPU and APU.
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