Summary
Applied Materials, Inc. (AMAT) announced on February 21, 2020, the entry into a new five-year, $1.5 billion revolving credit facility, replacing a previous agreement. This new facility, with JPMorgan Chase Bank, N.A. as the administrative agent, provides financial flexibility for general corporate purposes and can be expanded up to $2.0 billion under certain conditions. The company has not yet utilized any borrowings under this new agreement as of the filing date. This refinancing demonstrates Applied Materials' proactive approach to managing its capital structure and ensuring access to liquidity. The new credit agreement includes standard covenants, such as a financial covenant requiring a debt-to-adjusted EBITDA ratio not to exceed 3.50:1.00 (expandable to 4.00:1.00 post-acquisition), which indicates a commitment to maintaining a healthy balance sheet. The termination of the prior credit agreement without outstanding amounts signifies a smooth transition and no immediate debt repayment pressures.
Key Highlights
- 1Entered into a new five-year, $1.5 billion revolving credit facility on February 21, 2020.
- 2The new facility replaces a prior $1.5 billion credit agreement dated September 3, 2015.
- 3The facility has a sub-limit for letters of credit up to $400 million.
- 4Potential to increase the total facility size to $2.0 billion, subject to lender commitments and conditions.
- 5Borrowings can be based on Adjusted LIBOR or a Base Rate, with applicable margins tied to public debt credit ratings.
- 6Includes a financial covenant requiring consolidated funded debt to consolidated adjusted EBITDA ratio not to exceed 3.50 to 1.00 (potentially 4.00 to 1.00 after acquisitions).
- 7The prior credit agreement was terminated on February 21, 2020, with no outstanding amounts.