Summary
Flex Ltd. announced the execution of a new $2.0 billion Credit Agreement, effective January 7, 2021, which establishes a revolving credit facility maturing in January 2026. This new facility replaces the company's previous $2.2525 billion credit agreement that was set to mature in June 2022. The New Credit Facility provides significant financial flexibility, with provisions allowing for up to an additional $500 million in incremental term loan facilities or increased revolving commitments, subject to lender commitments and other conditions. Notably, the interest rates and fees associated with the New Credit Facility are tied to the company's credit ratings and, importantly, are subject to sustainability-linked adjustments. This means Flex can potentially benefit from reduced borrowing costs by achieving specific targets related to workplace safety and greenhouse gas emissions. The agreement also includes customary covenants and events of default, with specific financial ratio maintenance requirements, such as maximum total indebtedness to EBITDA and minimum interest coverage ratios.
Key Highlights
- 1Entered into a new $2.0 billion unsecured revolving credit facility maturing January 7, 2026.
- 2The new facility replaces the prior $2.2525 billion credit agreement which was due to mature in June 2022.
- 3Includes an accordion feature allowing for an aggregate increase of up to $500 million in incremental term loan facilities and/or revolving commitments.
- 4Interest rates and fees are linked to credit ratings and feature sustainability-linked adjustments for workplace safety and greenhouse gas emissions.
- 5The facility contains customary covenants, including restrictions on debt, acquisitions, asset dispositions, and affiliate transactions.
- 6Requires maintenance of a maximum total indebtedness to EBITDA ratio and a minimum interest coverage ratio.