Summary
Cadence Design Systems, Inc. (CDNS) announced a significant amendment to its credit facility on September 19, 2014. The company entered into a $250 million five-year senior unsecured revolving credit facility, effectively transitioning from a secured to an unsecured credit arrangement. This move involved releasing all previously held liens and subsidiary guarantees, which can signal increased financial flexibility and confidence from lenders. The primary use of these funds is flexible, covering working capital, capital expenditures, mergers and acquisitions, and other general corporate purposes. The terms regarding interest rates and fees remain largely consistent with the previous agreement, offering a choice between LIBOR-based or base rate-based interest with varying margins tied to the company's leverage ratio. This unsecured facility, maturing in September 2019, provides Cadence with substantial financial resources while maintaining key financial covenants such as debt-to-EBITDA and EBITDA-to-interest coverage ratios.
Key Highlights
- 1Cadence Design Systems entered into a $250 million, five-year senior unsecured revolving credit facility.
- 2The new facility amends and replaces a prior secured credit agreement, releasing all associated liens and subsidiary guarantees.
- 3Funds can be used for working capital, capital expenditures, M&A, and other lawful corporate purposes.
- 4The credit facility matures on September 19, 2019.
- 5Interest rates are based on either BBA LIBOR or a base rate, plus a margin dependent on Cadence's leverage ratio.
- 6Customary covenants restricting debt, liens, investments, and asset dispositions are in place.
- 7Key financial covenants include maintaining a funded debt to EBITDA ratio below 2.75:1 and an EBITDA to interest charges ratio of at least 3:1.