Summary
Micron Technology, Inc. (MU) announced on November 3, 2022, the entry into a new Term Loan Credit Agreement, securing a $2.6 billion committed term loan facility. This facility consists of three tranches with varying maturity dates and amortization schedules, designed to provide capital for general corporate purposes, potentially including capital expenditures. The company has the flexibility to increase this facility by up to an additional $1.3 billion under certain conditions. This financing strengthens Micron's liquidity position and provides flexibility for its ongoing capital needs in a dynamic industry. While the loan is unsecured and does not involve subsidiary guarantees at this time, it does include customary covenants. Key among these are a leverage ratio not to exceed 3.25 to 1.00 (with a temporary increase to 3.75 to 1.00 post-acquisition), and restrictions on certain corporate actions like mergers, asset disposals, and incurring additional secured or unsecured debt. The agreement does not restrict dividend payments.
Key Highlights
- 1Micron secured a new $2.6 billion term loan facility on November 3, 2022.
- 2Proceeds are designated for general corporate purposes, including potential capital expenditures.
- 3The facility has the option for an additional $1.3 billion in commitments.
- 4The loan has staggered maturities ranging from November 2025 to November 2027.
- 5A consolidated leverage ratio covenant of 3.25:1.00 (temporary increase to 3.75:1.00) must be maintained.
- 6Customary covenants restrict certain mergers, asset sales, and incurring additional debt.
- 7The term loan is unsecured and does not currently have subsidiary guarantees.