Summary
Microchip Technology Incorporated (MCHP) announced on June 28, 2013, the execution of a new Credit Agreement, effective June 27, 2013. This agreement replaces their previous credit facility from August 2011. The new facility provides significant borrowing capacity with a $350.0 million term loan and a substantial $1.65 billion revolving loan facility, terminating in June 2018. This strategic move enhances Microchip's financial flexibility, providing funds for working capital, general corporate purposes, and importantly, potential acquisition activities. The company has already drawn $350.0 million in term loans and $260.0 million in revolving loans primarily to refinance existing debt and cover associated closing costs. The agreement includes provisions for increasing commitments by up to an additional $300 million, underscoring the company's proactive approach to managing its capital structure and funding future growth initiatives.
Key Highlights
- 1New Credit Agreement executed on June 27, 2013, replacing the prior agreement from August 2011.
- 2Total borrowing capacity of $2.0 billion, consisting of a $350 million term loan and a $1.65 billion revolving credit facility.
- 3Maturity date for the credit facility is June 27, 2018.
- 4Option to increase commitments by an additional $300 million, subject to certain conditions.
- 5Proceeds from the new facility are designated for working capital, general corporate purposes, and potential acquisitions.
- 6At closing, $350 million in term loans and $260 million in revolving loans were borrowed, primarily for refinancing existing debt and closing costs.
- 7The agreement includes customary covenants and events of default, requiring maintenance of specific financial ratios (consolidated leverage and interest coverage).