8-KMaterial AgreementsFinancial EventsExhibits & Filings

TE Connectivity plc 8-K Report, Material Agreement (Nov 14, 2018)

Filed November 14, 2018For Securities:TEL

Summary

TE Connectivity plc (TEL) announced on November 14, 2018, that it has entered into an Amended and Restated Five-Year Senior Credit Agreement. This refiling of their existing credit facility with Bank of America, N.A. as administrative agent extends the maturity date and enhances its flexibility. The primary purpose of this amendment is to ensure continued access to capital and to better align the company's financing structure with its strategic objectives. Key modifications include an extended maturity to November 2023, increased borrowing capacity in various currencies, and the addition of an uncommitted incremental facility, providing greater financial agility. The company has also increased its permissible leverage ratio for acquisitions and adjusted thresholds for debt cross-defaults. These changes demonstrate TEL's proactive approach to managing its financial resources and supporting future growth opportunities.

Key Highlights

  • 1Entered into an Amended and Restated Five-Year Senior Credit Agreement on November 14, 2018.
  • 2Extended the maturity date of the credit facility from December 9, 2020, to November 14, 2023.
  • 3Increased the aggregate revolving credit commitment to $1,500,000,000.
  • 4Added an uncommitted incremental facility of up to $500,000,000 for additional borrowing capacity.
  • 5Increased the basket for Permitted Securitization Transactions from $250,000,000 to $750,000,000.
  • 6Allowed for a higher Consolidated Debt to Consolidated EBITDA ratio (4.25 to 1.00) during periods of material acquisitions.
  • 7Updated provisions related to LIBOR replacement, anti-money laundering, and sanctions regulations.

Frequently Asked Questions

The primary impact is an extension of their primary debt maturity to November 2023, providing greater certainty of funding. It also enhances financial flexibility through a larger credit facility, potential for incremental borrowing, and more flexible covenants related to acquisitions.

This filing represents an amendment and restatement of an existing credit facility, not necessarily the creation of new debt. It modifies the terms of their current borrowing capacity, extending its availability and adjusting certain conditions. Actual borrowing depends on the company's future financing needs.

This increase from $250 million to $750 million suggests TE Connectivity may utilize securitization of its assets (like accounts receivable) as a funding source more significantly in the future. This can provide additional liquidity and diversify funding options.

The ability to increase the Consolidated Debt to Consolidated EBITDA ratio to 4.25 to 1.00 for certain fiscal quarters during material acquisitions provides TE Connectivity with more flexibility to pursue strategic acquisitions without immediately violating its debt covenants. This could facilitate larger or more timely acquisitions.