8-KEarnings & ResultsMaterial AgreementsFinancial Events+1

WESTERN DIGITAL CORP 8-K Report, Material Agreement (Jan 31, 2023)

Filed January 31, 2023For Securities:WDC

Summary

Western Digital Corporation (WDC) has filed an 8-K report detailing two significant events. Firstly, the company entered into a new $875.0 million delayed draw term loan facility on January 25, 2023. This facility has a 364-day term and is designed to provide financial flexibility, with provisions for its maturity tied to outstanding convertible notes. The interest rates are variable, based on SOFR or a base rate plus applicable margins, and a commitment fee applies to the unused portion. Secondly, WDC announced its financial results for the fiscal second quarter ended December 30, 2022, on January 31, 2023. While the 8-K filing incorporates the press release with these results, the financial details of the quarter are not elaborated upon within the 8-K itself, but are available in the referenced press release. Investors should review the accompanying press release for specific Q2 2023 financial performance and operational updates.

Key Highlights

  • 1Western Digital entered into a new $875.0 million delayed draw term loan facility.
  • 2The new loan facility has a 364-day term.
  • 3The facility's maturity can be influenced by outstanding 2024 Convertible Notes.
  • 4Interest rates for the new loan are variable, based on Adjusted Term SOFR or a base rate, plus applicable margins.
  • 5A commitment fee of 0.200% is payable on the unused portion of the loan facility.
  • 6The company announced its fiscal second quarter (ended December 30, 2022) financial results on January 31, 2023.
  • 7The loan agreement includes covenants such as a maximum total leverage ratio and limits on Priority Debt.

Frequently Asked Questions

The new facility is intended to provide Western Digital with financial flexibility. It allows the company to draw funds up to $875.0 million, available until June 30, 2023. The specific terms suggest it can be used to manage potential liquidity needs, especially in relation to outstanding 2024 Convertible Notes.

The Delayed Draw Term Loans are payable on the earlier of (i) 364 days after they are drawn, or (ii) a date determined by the maturity of the company's 2024 Convertible Notes, specifically 91 days prior to the notes' maturity, unless the company maintains at least $1.0 billion in liquidity plus the principal amount of outstanding 2024 Convertible Notes.

The company has the option to choose between an Adjusted Term SOFR Rate plus an applicable margin (1.750% to 2.625%) or a base rate plus an applicable margin (0.750% to 1.625%). The specific margin depends on Western Digital's corporate family ratings from major credit agencies.

The 8-K filing mentions that the financial results were announced via a press release filed as Exhibit 99.1. Investors should refer to this press release for the specific financial performance and operational details of the fiscal second quarter.