Summary
Cadence Design Systems, Inc. (CDNS) announced on June 30, 2021, the establishment of a new $700 million, five-year senior unsecured revolving credit facility. This new facility replaces their previous credit agreement dated January 30, 2017. The primary purpose of this new credit line is to support general corporate purposes, providing Cadence with enhanced financial flexibility. An important feature of this new agreement is the provision allowing Cadence to increase the aggregate principal amount of revolving commitments by up to an additional $350 million, potentially bringing the total facility size to $1.050 billion. This offers significant room for future growth and strategic initiatives. The new facility includes customary covenants, such as restrictions on additional secured indebtedness and liens, as well as a financial covenant requiring a funded debt to EBITDA ratio not to exceed 3.25 to 1, with flexibility for a higher ratio following significant acquisitions.
Key Highlights
- 1New $700 million, five-year senior unsecured revolving credit facility established.
- 2Facility can be expanded by up to $350 million, for a total potential of $1.050 billion.
- 3Replaces the existing credit agreement dated January 30, 2017.
- 4Proceeds are designated for general corporate purposes, indicating flexibility.
- 5Interest rates are based on LIBOR or base rate plus a margin, varying with credit rating.
- 6Commitment fees on undrawn amounts also vary based on credit rating.
- 7Includes customary negative covenants and a financial covenant on funded debt to EBITDA ratio (initially 3.25:1, with a step-up provision for acquisitions).