8-KMaterial AgreementsFinancial Events

MICRON TECHNOLOGY INC 8-K Report, Material Agreement (Oct 11, 2016)

Filed October 11, 2016For Securities:MU

Summary

This 8-K filing by Micron Technology Inc. (MU) on October 11, 2016, details the entry into a significant syndicated loan agreement. Micron's subsidiaries, Inotera and MSTW, will jointly borrow up to NT$80 billion (approximately US$2.54 billion) under this agreement. The proceeds are designated for the Share Swap transaction consideration and related costs, as well as for Inotera's working capital needs. This financing represents a substantial capital commitment and impacts the company's leverage profile and operational flexibility. The loan is secured by liens on Inotera's assets and pledges of stock in MSTW and Inotera. Micron is providing a corporate guarantee for its subsidiaries' obligations. The loan agreement includes specific financial covenants that both MSTW and Micron must maintain, related to debt-to-EBITDA ratios and tangible net worth. Failure to meet MSTW's covenants could lead to an event of default, while Micron's covenant breaches would primarily result in increased interest rates.

Key Highlights

  • 1Micron's subsidiaries, Inotera and MSTW, entered into a NT$80 billion (approx. US$2.54 billion) syndicated loan agreement.
  • 2Loan proceeds will fund the Share Swap transaction and provide working capital for Inotera.
  • 3The loan is secured by Inotera's assets and pledges of subsidiary stock, with Micron providing a corporate guarantee.
  • 4The loan carries a floating interest rate of TAIBOR plus a 2.05% margin.
  • 5Specific financial covenants for MSTW (consolidated) and Micron (consolidated) are detailed, covering debt-to-EBITDA and tangible net worth.
  • 6Breaching MSTW's financial covenants could trigger an event of default, leading to loan acceleration.
  • 7Breaching Micron's financial covenants will result in an interest rate increase but not an event of default.

Frequently Asked Questions

The loan's primary purpose is to finance a portion of the consideration and related transaction costs for the Share Swap between Micron and Inotera, and to provide working capital for Inotera.

The loan matures 5 years from the date it is made. Principal repayment will occur in six equal semi-annual installments, starting thirty months after the loan is made.

If MSTW fails to maintain its required financial ratios for two consecutive semi-annual testing periods, it constitutes an event of default, potentially leading to acceleration of the loan. If Micron fails to maintain its covenants, the interest rate on the loan will increase by 0.25%, but it will not be considered an event of default.

The loan is secured by liens on certain assets, including a real estate mortgage on Inotera's production facility, a chattel mortgage on Inotera's equipment, a pledge of all MSTW stock held by Micron BV, and a pledge of approximately 80% of Inotera stock held by MSTW.