8-K/AMaterial Agreements

WESTERN DIGITAL CORP 8-K/A Report, Material Agreement (Mar 9, 2011)

Filed March 9, 2011For Securities:WDC

Summary

This 8-K/A filing from Western Digital Corporation (WDC) serves as an amendment to a previous 8-K report, primarily to correct a clerical error regarding the nature of new credit facilities. The amendment clarifies that the previously announced senior credit facilities, totaling $2.5 billion, will be "unsecured" rather than "secured" as initially stated. This is a crucial distinction for investors assessing the company's financial risk and leverage. The corrected filing details the commitment from Bank of America, N.A., for these unsecured credit facilities, which include a $500 million revolving credit facility and $2 billion in term loan facilities. These funds are intended to support the financing of an acquisition (referred to as "the Transaction"), refinance existing debt, and cover related fees and expenses, with the revolving facility also available for general corporate purposes.

Key Highlights

  • 1Correction of a clerical error: The senior credit facilities are confirmed to be unsecured, not secured.
  • 2Total commitment of $2.5 billion from Bank of America, N.A. for new credit facilities.
  • 3Credit facility structure includes a $500 million revolving credit facility and $2 billion in term loan facilities.
  • 4Proceeds from the credit facilities are earmarked for financing an acquisition, refinancing existing debt, and transaction-related expenses.
  • 5The revolving credit facility will also support working capital, capital expenditures, and general corporate purposes.
  • 6Conditions for the credit facilities include the consummation of the acquisition, absence of a material adverse event, and accuracy of representations.
  • 7The amendment emphasizes the unsecured nature of a significant debt facility, impacting the company's financial risk profile.

Frequently Asked Questions

The primary purpose of this filing is to amend a previous 8-K report and correct a clerical error. Specifically, it clarifies that the new senior credit facilities totaling $2.5 billion will be "unsecured" rather than "secured" as initially reported.

The new credit facilities have a total commitment of $2.5 billion. This amount is comprised of a $500 million revolving credit facility and $2 billion in term loan facilities.

The proceeds from these unsecured credit facilities are intended to finance a portion of the cash purchase price for an acquisition (referred to as "the Transaction"), refinance Western Digital Technologies, Inc.'s existing credit facilities, and pay certain fees and expenses associated with the transaction. The revolving credit facility is also designated for working capital, capital expenditures, and other general corporate purposes.

The distinction is crucial for investors as it directly impacts the company's financial risk and leverage. Unsecured debt is typically considered riskier for lenders because it is not backed by specific collateral. This means that in the event of default, holders of unsecured debt would have a lower priority claim on the company's assets compared to secured debt holders. Therefore, a significant unsecured credit facility can increase the overall financial risk profile of the company.