Summary
Lam Research Corporation (LRCX) filed an 8-K on November 11, 2015, detailing significant financing activities related to its pending acquisition of KLA-Tencor. The company entered into an Amended and Restated Credit Agreement that increases its revolving unsecured credit facility from $300 million to $750 million, with an option to expand to $1 billion. This facility is for general corporate purposes and was undrawn as of the filing date. Crucially, LRCX also secured a $900 million senior unsecured term loan facility, comprised of a $375 million 3-year tranche and a $525 million 5-year tranche. The proceeds from this term loan are specifically designated to partially finance the acquisition of KLA-Tencor and related expenses. The filing also notes a joinder agreement related to a bridge loan facility, indicating further financing arrangements for the acquisition. These actions demonstrate the company's proactive steps to secure necessary capital for a major strategic transaction.
Key Highlights
- 1Lam Research amended and restated its credit agreement, increasing its revolving unsecured credit facility to $750 million, with potential for up to $1 billion.
- 2The company secured a new $900 million senior unsecured term loan facility to finance the acquisition of KLA-Tencor.
- 3The term loan is split into two tranches: $375 million maturing in 3 years and $525 million maturing in 5 years.
- 4The revolving credit facility is available for general corporate purposes and was undrawn at the time of filing.
- 5The new credit facilities feature interest rates based on the company's debt rating, with options for base rate or LIBOR.
- 6Both credit agreements include customary affirmative and negative covenants, as well as financial covenants such as maintaining a consolidated debt to capitalization ratio and a minimum liquidity.
- 7A joinder agreement was entered into for a senior unsecured bridge loan facility, further supporting the KLA-Tencor acquisition financing.