Summary
Flextronics International Ltd. (FLEX) announced on May 15, 2007, through an 8-K filing, the entry into a new, larger $2.0 billion credit facility, replacing its prior $1.35 billion facility. This new facility, maturing in May 2012, offers flexible borrowing options with interest rates tied to either a base rate or LIBOR plus a margin that adjusts based on the company's credit ratings. It is an unsecured facility with covenants customary for such agreements, including restrictions on debt, investments, acquisitions, liens, asset disposals, distributions, and affiliate transactions, alongside financial maintenance covenants such as maximum debt-to-EBITDA and minimum fixed charge coverage ratios.
Key Highlights
- 1FLEX has secured a new $2.0 billion unsecured credit facility, increasing its borrowing capacity from the previous $1.35 billion facility.
- 2The new credit facility has a maturity date of May 10, 2012, providing a five-year term.
- 3Borrowing costs are variable, tied to either a base rate or LIBOR plus a margin, with rates influenced by the company's credit ratings from S&P and Moody's.
- 4The facility includes fees for unused commitments (0.10%-0.20%), utilization (0.125% if >50% used), and letters of credit (0.50%-1.25%).
- 5Customary covenants are in place, restricting debt, investments, acquisitions, asset sales, and shareholder distributions, subject to exceptions.
- 6Financial covenants require maintaining a maximum total debt-to-EBITDA ratio and a minimum fixed charge coverage ratio.
- 7The previous $1.35 billion credit facility was terminated concurrently with the new facility's establishment, with no material termination penalties incurred.