8-KMaterial AgreementsOther EventsExhibits & Filings

FLEX LTD. 8-K Report, Material Agreement (Jun 22, 2009)

Filed June 22, 2009For Securities:FLEX

Summary

Flextronics International Ltd. (FLEX) filed an 8-K on June 22, 2009, reporting on significant amendments to its indentures governing its 6 1/2% Senior Subordinated Notes due 2013 and 6 1/4% Senior Subordinated Notes due 2014. These amendments, achieved through supplemental indentures executed on June 19, 2009, were made possible by obtaining the necessary consents from noteholders. The primary objective of these changes is to provide the company with greater financial flexibility. Specifically, the amendments will allow Flextronics to more easily engage in activities such as repurchasing its equity securities, making payments on subordinated debt, and executing other restricted payments. Key provisions include restarting the restricted payments calculation period, excluding certain non-cash charges from net income calculations, permitting the redemption of its 1% Convertible Subordinated Notes due 2010, and allowing for an additional $250 million in restricted payments. These changes are intended to support the company's strategic financial management.

Key Highlights

  • 1Flextronics International Ltd. entered into Supplemental Indentures for its 6 1/2% and 6 1/4% Senior Subordinated Notes.
  • 2The amendments were effective upon execution on June 19, 2009, following receipt of noteholder consents.
  • 3The core purpose of the amendments is to grant the company increased flexibility for restricted payments.
  • 4This includes the ability to repurchase equity securities and make payments on subordinated debt.
  • 5The company can now exclude certain non-cash charges from net income calculations related to restricted payments.
  • 6A specific allowance is made to redeem the 1% Convertible Subordinated Notes due August 1, 2010.
  • 7An additional $250 million in restricted payments is permitted under the amended indentures.

Frequently Asked Questions

The amendments significantly increase Flextronics' flexibility to make restricted payments, which includes activities like repurchasing its own equity, paying down subordinated debt, and other strategic financial actions. This provides the company with more options for capital allocation.

The Supplemental Indentures became effective upon execution on June 19, 2009. However, the proposed amendments themselves will not become operative until the amounts payable by the company in connection with the related cash tender offer and consent solicitation are deposited with the depositary, which was expected to occur shortly after the offer's expiration.

The amendments specifically allow for greater flexibility in purchasing or making payments on equity securities and subordinated debt. Additionally, they permit the redemption of the 1% Convertible Subordinated Notes due August 1, 2010, and allow for an additional $250 million in restricted payments beyond what was previously permitted.

Flextronics obtained the necessary consents from holders of at least a majority of the outstanding aggregate principal amount of each series of the affected notes. This enabled the company to enter into the Supplemental Indentures and proceed with the amendments.