8-KMaterial AgreementsFinancial EventsExhibits & Filings

TERADYNE, INC 8-K Report, Material Agreement (May 5, 2020)

Filed May 5, 2020For Securities:TER

Summary

Teradyne, Inc. (TER) announced on May 5, 2020, the entry into a new three-year, senior secured revolving credit facility totaling $400 million. This facility, established on May 1, 2020, with Truist Bank as the administrative agent, provides Teradyne with significant financial flexibility for general corporate purposes and working capital needs. Importantly, the company has not yet drawn any funds under this facility, indicating a proactive approach to liquidity management as of the filing date. The credit facility is secured by company assets and certain domestic subsidiaries, with specific terms regarding interest rates (based on base rate or LIBOR plus applicable margins) and commitment fees on the unused portion. The agreement includes customary covenants and financial ratio requirements (Consolidated Leverage Ratio and Interest Coverage Ratio) that Teradyne must maintain. This new credit line enhances Teradyne's financial resilience and access to capital.

Key Highlights

  • 1Teradyne entered into a $400 million senior secured revolving credit facility on May 1, 2020.
  • 2The credit facility has a term of three years.
  • 3Proceeds are available for general corporate purposes and working capital.
  • 4No funds have been borrowed under the facility as of the filing date.
  • 5Interest rates are variable, based on either a base rate or LIBOR, plus applicable margins.
  • 6The facility is secured by company assets and guaranteed by certain domestic subsidiaries.
  • 7Customary covenants and financial ratio requirements (Consolidated Leverage Ratio, Interest Coverage Ratio) are included.

Frequently Asked Questions

The primary purpose of the new $400 million credit facility is to provide Teradyne with financial flexibility for general corporate purposes and working capital needs. It acts as a source of liquidity should the company require it.

No, as of the filing date (May 5, 2020), Teradyne had not borrowed any funds under this new credit facility. This indicates the company is establishing the facility as a precautionary measure or for future potential needs.

The credit facility requires Teradyne to maintain specific financial ratios, namely a Consolidated Leverage Ratio and an Interest Coverage Ratio, measured at the end of each fiscal quarter. Additionally, customary covenants limit the company's ability to sell assets, incur additional debt, grant liens, and make certain investments or restricted payments, subject to specified exceptions.

The interest rates are variable and depend on Teradyne's choice between a base rate or LIBOR, plus a margin that ranges from 0.50% to 2.25% per annum, based on the company's Consolidated Leverage Ratio. Teradyne also pays a commitment fee ranging from 0.25% to 0.40% per annum on the unused portion of the credit facility.