01—Abstract
Summary
Summary of the 8-K filed July 22, 2024. Cited figures are marked; the original filing is the authoritative source.
On July 19, 2024, Super Micro Computer, Inc. (the "Company") entered into a $500 milliona unsecured Term Loan Credit Agreement with lenders and Bank of America, N.A. as administrative agent.
Proceeds are to provide ongoing working capital and for other general corporate purposes. Borrowings bear interest at Term SOFR plus a 0.10%b SOFR adjustment plus 1.25%, or at an alternative base rate plus 0.25%. The agreement includes customary negative covenants, including a specified consolidated leverage ratio and, unless certain milestones are met, a consolidated interest coverage ratio.
The Term Loan Facility matures on January 17, 2025. On the same date, the Company entered into an Eighth Amendment to its Loan and Security Agreement dated April 19, 2018 (the "ABL Agreement") with Bank of America, N.A. as administrative agent, which among other things permits the Company to enter into and borrow under the Term Loan Facility. Under Item 7.01, the Company disclosed that it is in discussions with one or more financial institutions regarding a potential senior revolving credit facility, which it expects to use to repay and retire the Term Loan Facility and the ABL Agreement in full.
The Company anticipates entering into this facility in the first quarter of fiscal year 2025, but states there can be no assurance it will do so on acceptable terms or at all. Portions of Exhibit 10.1 have been redacted under Regulation S-K Item 601(b)(10).
02—Key points
Key Highlights
- New $500 million unsecured term loan facility entered July 19, 2024, with Bank of America, N.A. as administrative agent
- Term loan proceeds are earmarked for ongoing working capital and general corporate purposes
- Interest priced at Term SOFR plus 0.10% SOFR adjustment plus 1.25%, or an alternative base rate plus 0.25%
- Term loan matures January 17, 2025, a short tenor relative to typical term financing
- Covenants include a consolidated leverage ratio and, unless milestones are met, a consolidated interest coverage ratio, plus limits on subsidiary debt, liens, fundamental changes and asset dispositions
- Eighth Amendment to the April 19, 2018 ABL Agreement was executed the same day to permit the term loan borrowing
- Company is negotiating a senior revolving credit facility intended to repay both the term loan and ABL Agreement, targeted for the first quarter of fiscal 2025, with no assurance of terms or completion
03—Questions
Frequently Asked Questions
How much did Super Micro Computer borrow and on what terms?
The Company entered a $500 million unsecured term loan facility on July 19, 2024. Borrowings bear interest at Term SOFR plus a 0.10% SOFR adjustment plus 1.25%, or at a base rate plus 0.25%, at the Company's option.
When does the term loan come due?
The Term Loan Facility matures on January 17, 2025.
What will the loan proceeds be used for?
The filing states the proceeds will provide ongoing working capital and fund other general corporate purposes.
What financing is the Company planning to replace these facilities?
The Company is in discussions with one or more financial institutions about a senior revolving credit facility, which it expects to use to repay and retire the term loan and the ABL Agreement in full. It anticipates entering this facility in the first quarter of fiscal 2025, but cannot assure it will do so on acceptable terms or at all.
What restrictions does the new loan place on the Company?
The agreement contains customary negative covenants requiring a specified consolidated leverage ratio and, unless certain milestones are met, a consolidated interest coverage ratio. It also restricts subsidiary indebtedness, liens, certain fundamental changes and property dispositions, subject to exceptions.
04—Continue