8-KMaterial AgreementsFinancial EventsExhibits & Filings

WESTERN DIGITAL CORP 8-K Report, Material Agreement (Feb 12, 2008)

Filed February 12, 2008For Securities:WDC

Summary

Western Digital Corporation (WDC), through its wholly-owned subsidiary Western Digital Technologies, Inc. (WDTI), has entered into a new $750 million unsecured Credit Facility. This new facility, established on February 11, 2008, consists of a $500 million term loan and a $250 million revolving credit facility, with an option to increase by an additional $250 million. The full $750 million was drawn on the closing date. Crucially, the proceeds from this new Credit Facility were used to fully repay the outstanding $760 million from the previous Bridge Facility, which has now been terminated. This refinancing action demonstrates the company's proactive management of its debt obligations and provides a new, potentially more flexible, financing structure. The new Credit Facility includes various interest rate options, facility fees, amortization schedules, and covenants related to financial ratios and business operations, along with guarantees from the parent company and WD Media, Inc.

Key Highlights

  • 1Western Digital Technologies, Inc. (WDTI) secured a new $750 million unsecured Credit Facility on February 11, 2008.
  • 2The new facility comprises a $500 million term loan and a $250 million revolving credit facility, with potential for up to $250 million in expansion.
  • 3The entire $750 million available under the new Credit Facility was borrowed on the closing date.
  • 4This new financing was used to fully repay the previous $760 million Bridge Facility, which has now been terminated.
  • 5Borrowings under the new Credit Facility bear interest at either a Eurocurrency Rate or a Base Rate plus an applicable margin.
  • 6The Credit Facility includes covenants requiring compliance with leverage and interest coverage ratios, as well as restrictions on liens, indebtedness, and restricted payments.
  • 7The obligations under the Credit Facility are guaranteed by Western Digital Corporation and its subsidiary, WD Media, Inc.

Frequently Asked Questions

The new Credit Facility totals $750 million and is comprised of a $500 million term loan and a $250 million revolving credit facility. There is also an option to expand the facility by an additional $250 million.

The primary purpose was to repay in full the outstanding $760 million borrowed under the previous Bridge Facility, along with associated fees and expenses. This action effectively terminates the older Bridge Facility.

WDTI has the option to borrow at either a Eurocurrency Rate (based on LIBOR) or a Base Rate (federal funds rate plus 0.50% or prime rate, whichever is higher). Both options are subject to an applicable margin that varies based on the company's leverage ratio.

The facility requires WDTI to maintain specific leverage and interest coverage ratios. It also includes customary covenants that limit the company's ability to incur liens, incur additional indebtedness, make restricted payments, merge or consolidate, and enter into certain speculative hedging arrangements.