8-KMaterial AgreementsFinancial Events

MICRON TECHNOLOGY INC 8-K Report, Material Agreement (Feb 27, 2009)

Filed February 27, 2009For Securities:MU

Summary

Micron Technology Inc. (MU) announced on February 27, 2009, the entry into a material definitive agreement with the Economic Development Board of the Republic of Singapore (EDB). This agreement allows Micron to borrow up to 300 million Singapore Dollars (approximately $203 million USD at the time, assuming a rough conversion) at an interest rate of 5.38% through a term loan. The proceeds are specifically earmarked for equity contributions to its joint venture subsidiary, TECH Semiconductor Singapore Pte. Ltd. (TECH). These funds are intended to facilitate the purchase of production assets and meet specific production milestones for advanced process manufacturing at TECH. The term loan has a one-year draw period and a 36-month interest-only period post-drawing, with the full principal due thereafter. Importantly, Micron has pledged 66% of its shares in TECH as collateral for this loan, granting EDB significant rights in case of default. This financing underscores Micron's strategic investment in advanced manufacturing capabilities in Singapore.

Key Highlights

  • 1Micron secured a 300 million Singapore Dollar term loan facility from the Economic Development Board of Singapore at a 5.38% interest rate.
  • 2Loan proceeds must be used for equity contributions to TECH Semiconductor Singapore Pte. Ltd. (TECH) for purchasing production assets.
  • 3Funds are tied to meeting specific production milestones for advanced process manufacturing.
  • 4The term loan has a one-year draw period and a 36-month interest-only payment period.
  • 5Micron pledged 66% of its ownership stake in TECH as collateral for the loan.
  • 6The loan agreement includes customary covenants restricting TECH's and Micron's actions, such as incurring new debt or merging.
  • 7Micron can prepay the loan without penalty.

Frequently Asked Questions

The loan facility is intended to finance Micron's equity contributions to its joint venture, TECH Semiconductor Singapore Pte. Ltd. The funds will be used to acquire production assets and support the implementation of advanced process manufacturing, enabling TECH to meet specific production milestones.

Micron can borrow up to 300 million Singapore Dollars at an annual interest rate of 5.38%. The loan has a one-year period from the first drawing date during which funds can be drawn. Interest-only payments are required quarterly for 36 months after the first drawing, after which the principal becomes due. Prepayment without penalty is permitted.

Micron has pledged 66% of its outstanding shares in its joint venture, TECH Semiconductor Singapore Pte. Ltd., as collateral to the Economic Development Board of Singapore. In the event of a default on the loan, the EDB has rights to transfer and sell these shares to satisfy the outstanding debt.

The loan agreement includes various covenants. For TECH, these include restrictions on creating liens, incurring additional indebtedness, making loans, and changing its business operations. For Micron, there are restrictions on its ability to merge or consolidate and a requirement to maintain a certain percentage of ownership in TECH.