FLEX LTD. (NASDAQ:FLEX) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.
On June30, 2017 (the Closing Date), Flex Ltd. (the
Company), as borrower, entered into a new $2.2525
billionCredit Agreement (the New Credit Facility) with
Bank of America, N.A., as Administrative Agent and Swing Line
Lender, and the several banks and other financial institutions or
entities from time to time parties thereto as lenders (the
Lenders). The New Credit Facility, which matures on
June30, 2022, consists of (i)a $1.75 billion revolving credit
facility with a sublimit of $300 million available for swing line
loans and a sublimit of $150 million available for the issuance
of letters of credit and (ii)a $502.5 million term loan facility.
The New Credit Facility permits the Company, subject to obtaining
commitments from existing or additional lenders and subject to
certain other conditions, to add one or more incremental term
loan facilities and/or increase the revolving commitments in an
aggregate amount not to exceed $500 million.
On the Closing Date, the Company borrowed $502.5 million under
the term loan facility of the New Credit Facility to repay
approximately $502.5 million of outstanding term loans and other
amounts owing under the Companys existing $2.0 billion Credit
Agreement, dated as of March31, 2014, among the Company and
certain of its subsidiaries, as borrowers, Bank of America, N.A.,
as Administrative Agent and Swing Line Lender, and the other
Lenders party thereto (as amended, the Existing Credit
Facility), which term loans were otherwise due to mature on
March31, 2019. The New Credit Facility replaced the Companys
Existing Credit Facility, which was terminated on the Closing
Date.
Borrowings under the New Credit Facility bear interest, at the
Companys option, either at (i)the Base Rate, which is defined as
the greatest of (a)the Administrative Agents prime rate, (b)the
federal funds effective rate, plus 0.50% and (c)the LIBOR (the
London Interbank Offered Rate) rate that would be calculated as
of each day in respect of a proposed LIBOR loan with a one-month
interest period, plus 1.0%; plus, in the case of each of
clauses (a)through (c), an applicable margin ranging from 0.125%
to 0.875% per annum, based on the Companys credit ratings (as
determined by Standard Poors Financial Services LLC, Moodys
Investors Service,Inc. and Fitch Ratings Inc.) or (ii)LIBOR plus
the applicable margin for LIBOR loans ranging between 1.125% and
1.875% per annum, based on the Companys credit ratings. The
Company is required to pay a quarterly commitment fee on the
unutilized portion of the revolving credit commitments under the
New Credit Facility ranging from 0.15% to 0.30% per annum, based
on the Companys credit ratings. The Company is also required to
pay letter of credit usage fees ranging from 1.125% to 1.875% per
annum (based on the Companys credit ratings) on the amount of the
daily average outstanding letters of credit and a fronting fee of
0.125% per annum on the undrawn and unexpired amount of each
letter of credit.
The New Credit Facility is unsecured, and contains customary
restrictions on the ability of the Company and its subsidiaries
to (i)incur certain debt, (ii)make certain investments, (iii)make
certain acquisitions of other entities, (iv)incur liens,
(v)dispose of assets, (vi)make non-cash distributions to
shareholders, and (vii)engage in transactions with affiliates.
These covenants are subject to a number of significant exceptions
and limitations. The New Credit Facility also requires that the
Company maintain a maximum ratio of total indebtedness to EBITDA
(earnings before interest expense, taxes, depreciation and
amortization), and a minimum interest coverage ratio during the
term of the New Credit Facility.
The New Credit Facility contains customary events of default.
If an event of default under the New Credit Facility occurs and
is continuing, then the Administrative Agent shall, at the
request of, or may, with the consent of, the required lenders,
declare any outstanding obligations under the New Credit
Facility to be immediately due and payable. In addition, if an
actual or deemed entry of an order for relief with respect to
the Company is made under the United States bankruptcy code or
comparable foreign law, then any outstanding obligations under
the New Credit Facility will automatically become immediately
due and payable.
The obligations under the New Credit Facility are not
guaranteed by any subsidiary of the Company. Prior to the
termination of the Existing Credit Facility, certain
subsidiaries of the Company (the Subsidiary Guarantors)
guaranteed the Companys obligations under (i)the Existing
Credit Facility, (ii)the Companys 4.625% notes due 2020 and the
Companys 5.000% notes due 2023 issued to the Indenture, dated
as of February20, 2013, among the Company, the subsidiary
guarantors party thereto and U.S. Bank National Association, as
trustee (as amended by the First Supplemental Indenture, dated
as of March28, 2013, the Second Supplemental Indenture, dated
as of August25, 2014 and the Third Supplemental Indenture,
dated as of September11, 2015, the 2013 Indenture),
(iii)the Companys 4.750% Notes due 2025 issued to the
Indenture, dated as of June8, 2015, among the Company, the
subsidiary guarantors party thereto and U.S. Bank National
Association, as trustee (as amended by the First Supplemental
Indenture, dated as of September11, 2015, the 2015
Indenture) and (iv)the Term Loan Agreement, dated as of
November30, 2016, among the Company, the lenders from time to
time party thereto and The Bank of Tokyo-Mitsubishi UFJ,Ltd.,
as administrative agent (the Term Loan Agreement). Upon
the termination of the Existing Credit Facility on the Closing
Date, such Subsidiary Guarantors were released from their
guarantees under each of the 2013 Indenture, the 2015 Indenture
and the Term Loan Agreement.
The foregoing description of the New Credit Facility is
qualified in its entirety by reference to the complete text of
the New Credit Facility, a copy of which is filed as
Exhibit10.01 to this Current Report on Form8-K and incorporated
herein by reference.
Some of the lenders under the New Credit Facility and the
Existing Credit Facility and/or their respective affiliates
have from time to time performed and may in the future perform
various commercial banking, investment banking and other
financial advisory services for the Company and/or its
subsidiaries in the ordinary course of business, for which they
received or will receive customary fees and commissions.
Item 1.02 Termination of a Material Definitive
Agreement.
The information set forth in Item 1.01 above with respect to
the Existing Credit Facility is hereby incorporated by
reference into this Item 1.02.
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 in Item 1.01 above is hereby
incorporated by reference into this Item 2.03.
Item 5.02 Departure of Directors or Certain Officers;
Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers.
(b)On June29, 2017, H. Raymond Bingham, Chairman of the Board
of Directors of the Company tendered his resignation from the
Companys Board of Directors, effective immediately. Mr.Binghams
resignation is not the result of any disagreement with the
policies, practices or procedures of the Company.
Also on June29, 2017, the Board of Directors of the Company
elected Michael D. Capellas, an independent director, as
Chairman of the Board.
Item 8.01Other Events.
On the Closing Date, in accordance with the terms of the 2013
Indenture, the 2015 Indenture, and the Term Loan Agreement,
each of the Subsidiary Guarantors was released from its
guarantees under such agreements.
Item 9.01 Financial Statements and Exhibits.
(d)Exhibits
|
Exhibit |
|
|
|
10.01 |
Credit Agreement, dated as of June30, 2017, among Flex |
FLEX LTD. ExhibitEX-10.01 2 a17-15867_2ex10d01.htm EX-10.01 Exhibit 10.01 Published CUSIP Numbers: Deal: Y3003AAA9 Revolver: Y3003AAB7 Term: Y3003AAC5 CREDIT AGREEMENT Dated as of June 30,…To view the full exhibit click here About FLEX LTD. (NASDAQ:FLEX)
Flex Ltd, formerly Flextronics International Ltd. provides design, engineering, manufacturing, and supply chain services and solutions. The Company designs, builds, ships and services packaged consumer electronics and industrial products for original equipment manufacturers (OEMs). Its segments include High Reliability Solutions (HRS), Consumer Technologies Group (CTG), Industrial and Emerging Industries (IEI) and Communications & Enterprise Compute (CEC). The HRS segment consists of its medical business, automotive business, and defense and aerospace businesses. The CTG segment includes its mobile devices business, consumer electronics business and high-volume computing business. The IEI segment consists of semiconductor and capital equipment, office solutions, household industrial and lifestyle, industrial automation and kiosks, energy and metering, and lighting. The CEC segment includes radio access base stations, remote radio heads, and small cells for wireless infrastructure.
