Summary
Micron Technology Inc. (MU) has entered into a $750 million asset-based revolving credit facility for its subsidiary, Micron Semiconductor Asia Pte. Ltd., with a maturity date of February 12, 2020. This facility is secured by the subsidiary's accounts receivable, with borrowing availability limited to 80% of eligible receivables, subject to reserves and concentration limits. Importantly, Micron Technology Inc. provides an unconditional guarantee for this facility, meaning the parent company is fully liable for any borrowings. As of the filing date, there were no outstanding borrowings under this credit line.
Key Highlights
- 1Micron's subsidiary secured a $750 million revolving credit facility, maturing on February 12, 2020.
- 2The credit facility is asset-based, primarily secured by the subsidiary's accounts receivable.
- 3Borrowing capacity is capped at 80% of eligible accounts receivable, with potential reductions for reserves and concentration limits.
- 4Micron Technology Inc. has provided an unconditional guarantee for the subsidiary's obligations under the credit facility.
- 5The credit facility can be increased under certain conditions.
- 6Interest rates are based on LIBOR plus a margin that varies with the utilization of the facility (1.75%-2.25%).
- 7Commitment fees on undrawn amounts range from 0.25% to 0.375%.
Frequently Asked Questions
The credit facility is intended for general corporate purposes of Micron Semiconductor Asia Pte. Ltd., a subsidiary of Micron Technology Inc. It provides access to funding that can be drawn, repaid, and re-borrowed up to the established limit.
This means the credit line is secured by specific assets, in this case, the subsidiary's accounts receivable. This structure generally implies a lower risk for lenders compared to unsecured debt, as there are tangible assets backing the loans. For investors, it indicates a financing strategy tied to the company's working capital.
The unconditional guarantee signifies that Micron Technology Inc. is fully responsible for any debt incurred by its subsidiary under this facility. This provides lenders with the confidence of recourse to the parent company's financial strength, which is a crucial factor for assessing overall corporate financial risk.
No, the facility agreement explicitly states that there are no financial covenants. Furthermore, it does not contain any covenants that restrict Micron or its subsidiary from paying dividends or making other restricted payments.