8-KMaterial AgreementsShareholder MattersExhibits & Filings

FLEX LTD. 8-K Report, Material Agreement (Jul 18, 2006)

Filed July 18, 2006For Securities:FLEX

Summary

Flextronics International Ltd. (FLEX) filed an 8-K on July 18, 2006, reporting a material amendment to a Note Purchase Agreement originally entered into on March 2, 2003. The amendment, dated July 14, 2006, primarily concerns the Company's Convertible Junior Subordinated Notes due 2008, originally issued to Silver Lake Partners and its affiliates for $195.0 million. Key changes include extending the maturity date of these notes from 2008 to July 31, 2009, and modifying the settlement terms upon maturity. The notes will now be settled on a net share basis, meaning the Company will pay the face amount in cash and issue shares equivalent to any conversion value exceeding the face amount. Pre-maturity conversion or redemption is restricted, except in cases of a change of control. This amendment could impact the company's capital structure and potential dilution for existing shareholders.

Key Highlights

  • 1Flextronics International Ltd. amended its Note Purchase Agreement with Silver Lake Partners and its affiliates.
  • 2The maturity date for $195.0 million in Convertible Junior Subordinated Notes has been extended from 2008 to July 31, 2009.
  • 3The notes will now be settled on a net share basis upon maturity, involving both cash and stock issuance.
  • 4Pre-maturity conversion or redemption of the notes is now limited, with exceptions for change of control events.
  • 5James A. Davidson of Silver Lake Partners, who joined the board in 2003 in connection with the original agreement, remains a director.
  • 6The amendment was executed on July 14, 2006, and reported via Form 8-K on July 18, 2006.

Frequently Asked Questions

This 8-K filing reports a significant amendment to Flextronics International Ltd.'s Note Purchase Agreement with Silver Lake Partners and its affiliates. The primary changes involve extending the maturity date of $195 million in convertible notes and altering the settlement terms.

The maturity date of the notes has been extended from 2008 to July 31, 2009. Additionally, upon maturity, the notes will be settled on a net share basis, meaning the company will pay the face value in cash and issue shares for any excess conversion value. Conversion or redemption before maturity is now restricted, except for change of control events.

The net share settlement provision means that if the company's stock price is high enough at maturity, Flextronics will issue new shares to the noteholders to cover the difference between the note's face value and its conversion value. This could lead to dilution for existing shareholders if significant shares are issued.

Silver Lake Partners and its affiliates were the original purchasers of the $195 million in convertible notes in 2003. They are the noteholders party to the amendment. Mr. James A. Davidson, a managing director at Silver Lake Partners, is also a member of Flextronics' Board of Directors and Audit Committee, a position he has held since 2003.