Summary
FlexTronics International Ltd. (FLEX) announced on May 27, 2005, an amendment and restatement of its revolving credit facility, significantly enhancing its financial flexibility. The facility's total commitment has been increased from $1.1 billion to $1.35 billion, and its maturity has been extended from March 2008 to May 2010. This expansion provides the company with greater access to capital and a longer runway for its operations and strategic initiatives. The updated credit agreement includes two tranches: one for $1.105 billion and another for $245 million, catering to the company and its U.S. subsidiaries, respectively. Interest rates are tied to either a base rate or LIBOR, with margins that vary based on the company's senior debt credit ratings from Standard & Poor's and Moody's. While the facility is unsecured, it imposes certain financial covenants, including maximum total indebtedness to EBITDA and minimum fixed charge coverage ratios, alongside restrictions on debt, investments, acquisitions, liens, asset dispositions, and affiliate transactions. These covenants are subject to specified exceptions.
Key Highlights
- 1Increased revolving credit facility from $1.1 billion to $1.35 billion.
- 2Extended the maturity date of the credit facility from March 2008 to May 2010.
- 3The credit facility consists of two tranches: one for $1.105 billion and another for $245 million.
- 4Interest rates are variable, based on either a base rate or LIBOR, with margins dependent on credit ratings.
- 5The facility is unsecured but includes covenants such as maximum debt-to-EBITDA and minimum fixed charge coverage ratios.
- 6Covenants also restrict certain actions including incurring debt, making investments/acquisitions, incurring liens, disposing of assets, and making non-cash distributions.
- 7Borrowings are guaranteed by the company and certain subsidiaries.