8-KMaterial AgreementsFinancial EventsExhibits & Filings

KLA CORP 8-K Report, Material Agreement (Nov 30, 2017)

Filed November 30, 2017For Securities:KLAC

Summary

KLA Corp (KLAC) announced on November 30, 2017, the entry into a new Credit Agreement, establishing an unsecured revolving loan facility totaling $750.0 million. This facility includes the option to increase by an additional $250.0 million, providing significant financial flexibility. The primary purpose of this new facility was to repay and terminate the Company's previous credit agreement from 2014, with $250 million already drawn on the closing date for this refinancing purpose, along with cash on hand. The new credit facility matures on November 30, 2022, and allows for flexible borrowing, repayment, and reborrowing. It also features commitment fees ranging from 0.10% to 0.25% based on the Company's credit rating, and interest rates tied to either the Alternate Base Rate or Adjusted LIBO Rate, plus an applicable rate influenced by credit rating. The agreement includes standard covenants and events of default typical for such financing.

Key Highlights

  • 1KLA Corp entered into a new $750 million unsecured revolving credit facility on November 30, 2017.
  • 2The facility has an accordion feature allowing for an increase of up to $250 million.
  • 3The primary use of the new facility was to repay and terminate the Company's prior credit agreement dated November 14, 2014.
  • 4As of the closing date, $250 million was borrowed under the new facility.
  • 5The revolving loan facility matures on November 30, 2022.
  • 6Interest rates are variable, based on Alternate Base Rate or Adjusted LIBO Rate, plus a credit rating-dependent 'Applicable Rate'.
  • 7The agreement includes financial covenants such as maximum leverage ratio and minimum interest coverage ratio.

Frequently Asked Questions

The new unsecured revolving loan facility has an aggregate principal amount of $750.0 million, with an option to increase the facility by up to an additional $250.0 million in aggregate.

The primary purpose was to refinance existing debt. The proceeds from borrowings made on the closing date were used, along with cash on hand, to repay in full the Company's obligations under its previous credit agreement from November 14, 2014, and to terminate all commitments under that prior agreement.

The revolving loan facility matures on November 30, 2022. The Company can prepay revolving loans and reduce revolving loan commitments in whole or in part, subject to certain minimum thresholds, without incurring penalties or premiums, although customary breakage costs may apply.

The agreement contains customary affirmative and negative covenants. Specifically, it includes negative covenants restricting the creation of liens and entry into sale and leaseback transactions, as well as restricting subsidiaries from incurring additional indebtedness. It also imposes financial covenants requiring the maintenance of a maximum leverage ratio and a minimum interest coverage ratio.