Semtech Corporation (SMTC) Files An 8-K Entry into a Material Definitive Agreement

Semtech Corporation (SMTC) Files An 8-K Entry into a Material Definitive Agreement

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Item 1.01 Entry into a Material Definitive Agreement.

Refinancing of Credit Facilities

Overview

On November15, 2016 (the Closing Date), Semtech Corporation
(Semtech), with certain of its domestic subsidiaries as
guarantors (the Guarantors), entered into an Amended and Restated
Credit Agreement (the Credit Agreement) with the lenders referred
to therein (the Lenders), and HSBC Bank USA, National
Association, as administrative agent (in such capacity, the
Administrative Agent) and as swing line lender and letter of
credit issuer. to the Credit Agreement, the Lenders provided
Semtech with senior secured first lien credit facilities in an
aggregate principal amount of $400.0 million (the New
Facilities), consisting of term loans in an aggregate principal
amount of $150.0 million (the Term Loans) and revolving
commitments in an aggregate principal amount of $250.0 million
(the Revolving Commitments). Up to $40.0 million of the Revolving
Commitments may be used to obtain letters of credit, up to $25.0
million of the Revolving Commitments may be used to obtain swing
line loans, and up to $40.0 million of the Revolving Commitments
may be used to obtain revolving loans and letters of credit in
certain currencies other than U.S. Dollars (Alternative
Currencies). Each of the Term Loans and the Revolving Commitments
is scheduled to mature on November12, 2021.

The New Facilities refinanced Semtechs existing $400.0 million
senior secured first lien credit facilities (the Prior Credit
Facilities), entered into on May2, 2013, with the domestic
subsidiaries of Semtech party thereto as guarantors, the
financial institutions party thereto as lenders and HSBC Bank
USA, National Association, as administrative agent and as swing
line lender and letter of credit issuer. All of the proceeds of
the Term Loans were used on the Closing Date to repay in full all
of the obligations outstanding under the Prior Credit Facilities
and to pay transaction costs in connection with such refinancing
and the New Facilities. As of the Closing Date, approximately
$153.0 million of the Revolving Commitments were undrawn. The
proceeds of the new revolving credit facility may be used by
Semtech for capital expenditures, permitted acquisitions,
permitted dividends, working capital and general corporate
purposes.

The Credit Agreement provides that, subject to certain
conditions, Semtech may request, at any time and from time to
time, the establishment of one or more additional term loan
facilities and/or increases to the Revolving Commitments in an
aggregate principal amount not to exceed the sum of (a)$150.0
million and (b)the aggregate principal amount of all voluntary
prepayments of Term Loans made prior to the date of incurrence of
such additional term loan facilities and/or increases to the
Revolving Commitments.

Interest Rates

Interest on loans made under the Credit Agreement in U.S. Dollars
accrues, at Semtechs option, at a rate per annum equal to (1)the
Base Rate (as defined below) plus a margin ranging from 0.25% to
1.25% depending upon Semtechs consolidated leverage ratio or
(2)LIBOR (determined with respect to deposits in U.S. Dollars)
for an interest period to be selected by Semtech plus a margin
ranging from 1.25% to 2.25% depending upon Semtechs consolidated
leverage ratio (such margin, the Applicable Margin). The initial
interest margin will be 2.00% for Base Rate loans and 1.00% for
LIBOR rate loans, applicable until 2 business days following
delivery of a compliance certificate by Semtech to the
Administrative Agent with respect to the first fiscal period
ending after the Closing Date. The Base Rate is equal to a
fluctuating rate equal to the highest of (a)the prime rate of the
Administrative Agent, (b) of 1% above the federal funds effective
rate published by the Federal Reserve Bank of New York and
(c)one-month LIBOR (determined with respect to deposits in U.S.
Dollars) plus 1.00%.

Interest on loans made under the Credit Agreement in Alternative
Currencies accrues at a rate per annum equal to LIBOR (determined
with respect to deposits in the applicable Alternative Currency)
(other than loans made in Canadian Dollars, for which a special
reference rate for Canadian Dollars applies) for an interest
period to be selected by Semtech plus the Applicable Margin.

Fees

Commitment fees on the unused portion of the Revolving
Commitments accrue at a rate per annum ranging from 0.20% to
0.45% depending upon Semtechs consolidated leverage ratio,
provided the initial commitment fee shall be 0.40% per annum,
applicable until 2 business days following delivery of a
compliance certificate by Semtech to the Administrative Agent
with respect to the first fiscal period ending after the Closing
Date.


With respect to letters of credit, Semtech will pay the
Administrative Agent, for the account of the lenders under the
revolving credit facility, letter of credit participation fees
at a rate per annum equal to the Applicable Margin then in
effect with respect to LIBOR-based loans under the Revolving
Commitments on the face amount of all outstanding letters of
credit. Semtech will also pay HSBC Bank USA, N.A., as the
issuing bank, a fronting fee for each letter of credit issued
under the Credit Agreement at a rate equal to 0.125% per annum
based on the maximum amount available to be drawn under each
such letter of credit, as well as its customary documentation
fees.

Guarantee and Security

All obligations of Semtech under the New Facilities are
unconditionally guaranteed by each of the Guarantors, which
include all of the direct and indirect domestic subsidiaries of
Semtech, other than certain excluded subsidiaries, including,
but not limited to, any domestic subsidiary the primary assets
of which consist of equity or debt of non-U.S. subsidiaries,
certain immaterial non-wholly-owned domestic subsidiaries and
subsidiaries that are prohibited from providing a guarantee
under applicable law or that would require governmental
approval to provide such guarantee.

Semtech and the Guarantors have also pledged substantially all
of their assets to secure their obligations under the New
Facilities, including Semtechs owned real property located in
Camarillo, California.

Amortization and Prepayment

The outstanding principal balance of the Term Loans will be
subject to repayment in equal quarterly installments beginning
on the last day of Semtechs fiscal quarter ending closest to
January31, 2017 in an amount equal to 10.0% per annum of the
original principal amount of the Term Loans on the Closing Date
in the first two years after the Closing Date, 12.5% per annum
in years three and four after the Closing Date, and 15.0% per
annum in year five after the Closing Date, with the balance
being due at maturity on November12, 2021. No amortization is
required with respect to the revolving credit facility. Semtech
may voluntarily prepay borrowings under the Credit Facilities
at any time and from time to time, without premium or penalty,
other than customary breakage costs and fees for LIBOR-based
loans.

The Term Loans must be mandatorily prepaid using the proceeds
of certain dispositions of assets and receipt of insurance
proceeds, subject to agreed upon thresholds and exceptions and
customary reinvestment rights.

Representations, Warranties, Covenants and Events
of Default

The Credit Agreement contains representations and warranties
and affirmative and negative covenants, including financial
covenants, that are customary in similar financings. The
negative covenants restrict or limit the ability of Semtech and
its subsidiaries to, among other things, incur indebtedness;
create liens on assets; engage in certain fundamental corporate
changes; make investments; sell or otherwise dispose of assets;
repurchase stock, pay dividends or make similar distributions;
engage in certain affiliate transactions; or enter into
agreements that restrict Semtechs ability to create liens, pay
dividends or make loan repayments. In addition, Semtechs
ability to make capital expenditures is subject to dollar
limitations during each fiscal year.

Semtech must maintain a maximum consolidated leverage ratio,
determined as of the last day of each fiscal quarter, of 3.00
to 1.00 or less; provided that, such maximum consolidated
leverage ratio may be increased to 3.25 to 1.00 or 3.50 to
1.00, as applicable, for the four consecutive fiscal quarters
ending on or after the date of consummation of a permitted
acquisition which constitutes a Material Acquisition under the
Credit Agreement, subject to the satisfaction of certain
conditions.

Subject to agreed upon thresholds and cure periods, the New
Facilities contain customary events of default including, but
not limited to, the failure to make payments of principal or
interest under the New Facilities, the failure to comply with
other covenants and agreements in the New Facilities, material
inaccuracy of any representation, warranty, statement or
certification made by Semtech or its subsidiaries in connection
with the Credit Agreement, payment or other default under
certain other material indebtedness, the acceleration of such
other indebtedness, the invalidity of the Credit Agreement or
related loan documents, material judgments and the insolvency
or initiation of bankruptcy proceedings in respect of Semtech,
any Guarantor, or any other material subsidiary. Upon the
occurrence of an event of default which is continuing, the
obligations under the New Facilities may be declared to be due
and payable and existing letters of credit may be required to
be cash collateralized.

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, a copy of which is
included as Exhibit10.1 to this Current Report on Form8-K and
incorporated herein by reference.


Item 2.03 Creation of a Direct Financial Obligation or
an Obligation under an Off-Balance Sheet Arrangement of a
Registrant.

The information described under Item 1.01 above is incorporated
herein by reference.

Item 7.01 Regulation FD Disclosure.

On November16, 2016, Semtech issued a press release announcing
the refinancing and the New Facilities. A copy of the press
release is furnished and attached hereto as Exhibit99.1.

Item 9.01 Financial Statements and Exhibits.

(d)Exhibits

ExhibitNo.

Description

10.1

Amended and Restated Credit Agreement dated November15,
2016 entered into among Semtech Corporation, the
guarantors party thereto, the lenders party thereto and
HSBC Bank USA, National Association, as administrative
agent and as swing line lender and L/C issuer.

99.1

Press Release dated November16, 2016.



About Semtech Corporation (SMTC)


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