8-KMaterial AgreementsFinancial EventsExhibits & Filings

APPLIED MATERIALS INC /DE 8-K Report, Material Agreement (May 31, 2011)

Filed May 31, 2011For Securities:AMAT

Summary

Applied Materials Inc. (AMAT) filed an 8-K on May 31, 2011, to disclose the execution of definitive financing agreements for its previously announced acquisition of Varian Semiconductor Equipment Associates, Inc. (Varian). This report details the company's arrangements for securing the necessary funds, a critical step in moving forward with the $63 per share cash acquisition. The company entered into a U.S.$2 billion Bridge Loan Agreement and a U.S.$1.5 billion four-year Credit Agreement. Both agreements are with a syndicate of lenders led by JPMorgan Chase Bank, N.A., and are designed to fund a portion of the cash consideration for the Varian acquisition, with the Credit Agreement also available for general corporate purposes. This filing provides clarity on the financing structure supporting this significant M&A activity.

Key Highlights

  • 1Execution of a U.S.$2 billion Bridge Loan Agreement to fund a portion of the Varian acquisition.
  • 2Entry into a U.S.$1.5 billion four-year Credit Agreement, also available for general corporate purposes.
  • 3Both new credit facilities are unsecured and led by JPMorgan Chase Bank, N.A. as administrative agent.
  • 4The Bridge Loan Agreement matures one year after the Merger Closing Date, while the Credit Agreement expires on May 25, 2015.
  • 5The new Credit Agreement replaces a previous $1 billion credit facility that was set to expire in January 2012.
  • 6Standard affirmative and negative covenants, including financial ratio requirements, are present in both agreements.
  • 7Events of default are defined, which could lead to termination of commitments and immediate repayment demands.

Frequently Asked Questions

The primary purpose of the new financing agreements, the Bridge Loan Agreement and the Credit Agreement, is to secure a portion of the cash consideration required for Applied Materials' acquisition of Varian Semiconductor Equipment Associates, Inc. The Credit Agreement also provides flexibility for general corporate purposes.

Applied Materials has secured up to U.S.$2 billion through the Bridge Loan Agreement and up to U.S.$1.5 billion through the Credit Agreement, totaling U.S.$3.5 billion available for the acquisition and other corporate needs.

The Bridge Loan Agreement matures on the first anniversary of the Merger Closing Date. The Credit Agreement is a four-year facility, set to expire on May 25, 2015.

No, this filing specifically concerns the definitive financing agreements. The acquisition of Varian is still pending and requires further steps, including regulatory approvals and Varian shareholder approval, as indicated by the mention of Varian filing a proxy statement.