8-KMaterial AgreementsFinancial Events

MICRON TECHNOLOGY INC 8-K Report, Material Agreement (Jul 3, 2018)

Filed July 3, 2018For Securities:MU

Summary

Micron Technology, Inc. (MU) has entered into a new $2.0 billion revolving credit facility, maturing in five years on July 3, 2023. This facility, established on July 3, 2018, provides significant financial flexibility and is secured by substantially all of Micron's assets and those of its subsidiary guarantors. Notably, as of the filing date, there were no outstanding borrowings under this new credit line, indicating a proactive approach to liquidity management. The credit agreement includes provisions for adding incremental term or revolving facilities, further enhancing Micron's ability to access capital as needed. The facility is governed by financial covenants, including a maximum leverage ratio of 2.75x (with a temporary increase to 3.00x following acquisitions) and a minimum interest coverage ratio of 3.50x. These covenants aim to ensure the company maintains a healthy financial position while utilizing this credit line.

Key Highlights

  • 1Secured a new $2.0 billion revolving credit facility with a 5-year maturity.
  • 2Facility is secured by a first-priority lien on substantially all of Micron's and subsidiary guarantors' assets.
  • 3No borrowings were outstanding under the new facility at the time of filing, suggesting strong current liquidity.
  • 4Includes options to add incremental term and revolving facilities for future capital needs.
  • 5Key financial covenants include a maximum leverage ratio (2.75x, temporary 3.00x) and a minimum interest coverage ratio (3.50x).
  • 6Collateral and guarantees can be suspended if Micron achieves certain credit ratings (Ba1/BB+/BB+ from at least two agencies) and repays its existing term loan.
  • 7The agreement contains standard representations, warranties, affirmative and negative covenants, and events of default typical for such credit facilities.

Frequently Asked Questions

The $2.0 billion revolving credit facility provides Micron with increased financial flexibility and access to liquidity. It can be used for general corporate purposes and to support ongoing operations. The facility also allows for the potential addition of incremental debt facilities, offering scalability for future capital requirements.

Micron must maintain a consolidated leverage ratio (total indebtedness to EBITDA) not exceeding 2.75x (or 3.00x temporarily after acquisitions) and a consolidated interest coverage ratio (EBITDA to net interest expense) of at least 3.50x. These covenants are designed to ensure the company's financial health remains robust.

The credit facility is secured by a first-priority lien on substantially all of Micron's assets and the assets of its subsidiary guarantors. This means that in the event of default, these assets would be available to lenders.

Yes, the collateral and guarantees can be suspended if Micron achieves a corporate credit rating of at least Ba1/BB+/BB+ from two of the major rating agencies (Moody's, S&P, Fitch), repays its existing term loan, and meets other specific criteria related to priority debt. The collateral and guarantees would automatically reinstate if Micron's credit rating drops below certain thresholds.