8-KMaterial AgreementsFinancial EventsExhibits & Filings

FLEX LTD. 8-K Report, Material Agreement (Sep 4, 2013)

Filed September 4, 2013For Securities:FLEX

Summary

Flextronics International Ltd. (FLEX) announced on August 30, 2013, the execution of a new $600 million term loan agreement, maturing on August 30, 2018. This new facility was utilized to immediately repay outstanding balances on existing term loans that were scheduled to mature in late 2013 and 2014. The company also has the option to increase the facility by up to $150 million. The new loan is unsecured and bears interest at variable rates based on prime or LIBOR, plus an applicable margin determined by FLEX's credit ratings. Covenants include restrictions on debt, investments, acquisitions, liens, asset disposals, dividends, and affiliate transactions, alongside financial maintenance covenants regarding total indebtedness to EBITDA and interest coverage. Certain subsidiaries provide guarantees for the borrowings.

Key Highlights

  • 1FLEX secured a new $600 million unsecured term loan facility on August 30, 2013.
  • 2The term loan matures on August 30, 2018, extending its debt maturity profile.
  • 3Proceeds from the new loan were used to refinance existing debt due in 2013 and 2014.
  • 4The company has the flexibility to request an additional $150 million in borrowings.
  • 5Interest rates are variable, based on prime or LIBOR, plus a credit rating-dependent margin.
  • 6The agreement includes standard financial covenants (leverage and interest coverage) and restrictive covenants on business activities.
  • 7Certain subsidiaries have provided guarantees for the new loan.

Frequently Asked Questions

The primary purpose of the new $600 million term loan is to refinance and repay existing outstanding loans that were scheduled to mature in late 2013 and 2014. This proactive move extends the company's debt maturity profile and potentially offers more favorable terms.

The loan is unsecured, carries variable interest rates (prime or LIBOR plus a margin), matures in five years (August 2018), and includes covenants that restrict certain company actions like incurring additional debt, making investments, or disposing of assets. It also requires maintaining specific leverage and interest coverage ratios.

Yes, the company has the option to request an increase to the term loan facility or add new tranches of term loans, up to an aggregate of an additional $150 million. The terms for any such increase would be subject to agreement with the lenders.

Yes, certain subsidiaries of Flextronics International Ltd. have provided guarantees for the borrowings under this new $600 million term loan agreement.