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CADENCE DESIGN SYSTEMS INC 8-K Report, Material Agreement (Sep 8, 2022)

Reports
Material Agreements·Financial Events·Corporate Changes+1
Filing Date
Filed September 8, 2022
Period End
September 7, 2022
Security
CDNS
In the record · 2016–202610-K1210-Q328-K98

CDNS filed 12 annual reports (10-K), 32 quarterly reports (10-Q) and 98 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Feb ’16Feb ’16
  2. Leadership change8-K · Jul ’21Jul ’21
  3. Leadership change8-K · May ’26May ’26

01—Abstract

Summary

Summary of the 8-K filed September 8, 2022. Cited figures are marked; the original filing is the authoritative source.

Cadence Design Systems, Inc. (CDNS) has executed a new $300 milliona three-year senior unsecured term loan facility.

The primary purpose of this new facility is to repay existing debt used for the recent acquisition of OpenEye Scientific Software, Inc. This move indicates a strategic refinancing effort by the company to manage its debt obligations following an acquisition. In addition to the new loan, CDNS amended its existing credit agreement to transition its benchmark interest rate from LIBOR to Term SOFR and to align its fiscal year-end with the calendar year starting in 2023.

The company's financial covenants remain largely in place, with a notable adjustment to the funded debt to EBITDA ratio that allows for a temporary step-up following a significant acquisition. These actions reflect proactive financial management and operational alignment.

02—Key points

Key Highlights

  1. Secured a new $300 million, three-year senior unsecured term loan facility.
  2. The new loan proceeds are designated to repay existing debt incurred for the acquisition of OpenEye Scientific Software.
  3. Amended existing credit agreement to replace LIBOR with Term SOFR as the benchmark interest rate.
  4. Approved a change in fiscal year-end to align with the calendar year, effective 2023.
  5. Maintained customary negative covenants, with a flexible financial covenant for funded debt to EBITDA ratio post-acquisition.
  6. The funded debt to EBITDA ratio covenant has a step-up provision to 3.75 to 1 for one year following a qualifying acquisition of at least $250 million.

03—Questions

Frequently Asked Questions

  1. What is the purpose of the new $300 million loan facility?

    The new $300 million term loan facility was obtained to repay approximately $300 million of existing borrowings that were used to fund the company's acquisition of OpenEye Scientific Software, Inc. This indicates a refinancing of acquisition-related debt.

  2. How will the interest rate on the new loan be determined?

    Interest on the new loan will be based on either Term SOFR plus a margin (0.625% to 1.125%) or a base rate plus a margin (0.0% to 0.125%), with the specific margin dependent on Cadence's debt rating.

  3. What are the key financial covenants for this new loan?

    The loan agreement includes customary negative covenants restricting debt, liens, and asset dispositions. A key financial covenant requires maintaining a funded debt to EBITDA ratio not greater than 3.25 to 1, with a provision to step up to 3.75 to 1 for one year following a significant acquisition (at least $250 million) that results in a pro forma leverage ratio between 3.00 to 1 and 3.50 to 1.

  4. Why is Cadence changing its fiscal year end?

    Cadence is changing its fiscal year end from the Saturday closest to December 31 to December 31, effective for the 2023 fiscal year. This change aligns the company's financial reporting with the standard calendar year, which can simplify financial planning and reporting processes.

04—Continue

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