Summary
On September 4, 2009, First Solar, Inc. announced the closing of a significant new $300 million senior secured three-year revolving credit facility. This facility provides the company and designated subsidiaries, including a specific German subsidiary, with access to capital for general corporate purposes. The credit facility includes provisions for letters of credit and swingline loans, with an option to increase the total commitment to $400 million under certain conditions. This move signals a proactive approach by First Solar to secure financial flexibility and support its operational and growth initiatives during a dynamic economic period.
Key Highlights
- 1First Solar secured a $300 million revolving credit facility, maturing in three years.
- 2The facility provides flexibility for general corporate purposes, including letters of credit and swingline loans.
- 3There is an option to increase the total commitments under the facility up to $400 million.
- 4Borrowing costs are tied to an applicable margin plus either a base rate or a eurocurrency rate (LIBOR-based).
- 5Interest rates and commitment fees will adjust based on the company's leverage ratio and debt ratings from Moody's and S&P.
- 6The credit facility is secured by pledges of capital stock in key international subsidiaries (Singapore and Germany) and security interests in intercompany receivables.
- 7The agreement includes various covenants restricting the ability of the company and its restricted subsidiaries to incur additional debt, dispose of assets, and engage in certain other corporate actions, alongside financial covenants related to leverage, EBITDA, and liquidity.
Frequently Asked Questions
The primary purpose of the $300 million revolving credit facility is to provide First Solar and its designated subsidiaries with financial flexibility for general corporate purposes. This includes supporting ongoing operations, potential investments, and managing working capital needs.
The credit facility has a three-year maturity. Importantly, First Solar has the right to increase the aggregate commitments under this facility up to $400 million, subject to certain conditions, indicating potential future capital needs or growth plans.
Interest rates will be based on an applicable margin plus either a base rate or a eurocurrency rate. Both the interest rates and commitment fees are subject to adjustment based on First Solar's consolidated leverage ratio and its credit ratings from Moody's and Standard & Poor's. This structure links financing costs to the company's financial health and market perception.
The credit facility is secured by First Solar's pledge of 66% of the capital stock of its Singapore subsidiary (First Solar FE Holdings Pte Ltd.) and its German subsidiary (First Solar Holdings GmbH). Additionally, it's secured by security interests in intercompany receivables.