Summary
Western Digital Corporation (WDC) announced on February 27, 2018, significant amendments to its Loan Agreement through Amendment No. 7. The primary focus of this amendment is to refinance existing debt and enhance financial flexibility. Key actions include the repayment of outstanding 2021 Term A loans and their replacement with new Term A-1 loans maturing in 2023, totaling over $4 billion. Additionally, the company has replaced its existing revolving credit facility with a new, larger, and longer-term facility, increasing its aggregate revolving credit capacity to $2.25 billion maturing in 2023.
Key Highlights
- 1Refinanced $4.02 billion in 2021 Term A loans with new Term A-1 loans due in 2023.
- 2Established a new 5-year, $1.5 billion revolving credit facility, which was subsequently increased by $750 million to $2.25 billion maturing in 2023.
- 3Used proceeds from new loans and convertible notes to fully redeem outstanding 7.375% senior secured notes due 2023.
- 4Secured more covenant flexibility and modifications to financial maintenance covenants, offering operational and strategic maneuverability.
- 5Introduced provisions for a "Collateral and Guarantee Suspension" under specific credit rating and debt repayment conditions, potentially leading to unsecured covenants and increased flexibility.
- 6Modified amortization schedules for new term loans, with initial quarterly payments of 0.625% and later 1.25%, followed by a balloon payment.
- 7The new Term A-1 loans and revolving facility are subject to interest rates tied to LIBOR or base rate plus applicable margins, with initial rates based on corporate family ratings.