Summary
This 8-K filing by QUALCOMM Incorporated (QCOM) on March 9, 2018, details the entry into a significant Credit Agreement on March 6, 2018. This agreement establishes a $3.0 billion senior unsecured delayed-draw term loan facility and a $3.0 billion senior unsecured revolving credit facility. A key purpose for these facilities is to finance Qualcomm's proposed acquisition of NXP Semiconductors N.V., which has been a point of focus for investors. The remaining proceeds can be used for general corporate purposes, including working capital and capital expenditures.
Key Highlights
- 1Qualcomm entered into a new Credit Agreement on March 6, 2018, establishing two senior unsecured credit facilities totaling $6.0 billion ($3.0 billion term loan and $3.0 billion revolving credit).
- 2A primary intended use of the credit facilities is to finance the ongoing acquisition of NXP Semiconductors N.V.
- 3The term loan facility has a maturity date of December 31, 2018, and its commitments expire under specific conditions related to the NXP acquisition or other termination events.
- 4The revolving credit facility also matures on December 31, 2018, and its availability is contingent on certain conditions, including the NXP acquisition process.
- 5Interest rates for both facilities are variable, based on either a reserve-adjusted Eurocurrency Rate or a Base Rate, plus an applicable margin that depends on Qualcomm's credit ratings.
- 6The company is subject to certain covenants, including maintaining a minimum interest coverage ratio (EBITDA to interest expense) of 3.00 to 1.00, and limitations on liens and indebtedness for subsidiaries.
- 7As of the filing date, no funds had been drawn under these new credit facilities.
Frequently Asked Questions
The primary stated purpose of these credit facilities is to provide financing for Qualcomm's proposed acquisition of NXP Semiconductors N.V. Additionally, any undrawn amounts can be utilized for general corporate purposes, including working capital and capital expenditures.
Both the term loan facility and the revolving credit facility mature on December 31, 2018. The commitments under the term loan facility, in particular, are tied to the NXP acquisition and will expire if the acquisition is consummated without drawing on the term loan, if the purchase agreement is terminated, or upon reaching a specified 'End Date' related to the acquisition timeline.
Both the term loan facility and the revolving credit facility are senior unsecured. This means they are not backed by specific collateral. They are not expected to be guaranteed by Qualcomm's subsidiaries, subject to the terms of the Credit Agreement. The company will be subject to covenants, including a minimum interest coverage ratio.
No, as of March 9, 2018, the filing date of this report, Qualcomm had not borrowed any funds under these new credit facilities.