Flex enters into $700 million five-year replacement term loan

By Marisa Wong

Morgantown, W.Va., Dec. 1 – Flex Ltd. (formerly Flextronics International Ltd.) entered into a $700 million term loan agreement on Nov. 30, according to an 8-K filing with the Securities and Exchange Commission.

MUFG, Sumitomo Mitsui Banking Corp., Bank of China, New York Branch, DBS Bank, Ltd. and Mizuho Bank (USA) are joint lead arrangers and bookrunners with MUFG as administrative agent, and Sumitomo Mitsui as syndication agent. Bank of China, DBS, Industrial and Commercial Bank of China Ltd., New York Branch and Mizuho are co-documentation agents.

The term loan matures on Nov. 30, 2021.

The loan agreement permits the company to add one or more incremental term loan facilities up to a total of $150 million.

At closing, the company borrowed the full $700 million to repay about $570.8 million of outstanding term loans under an existing agreement dated Aug. 30, 2013. Those loans would have matured on Aug. 30, 2018. The prior loan agreement was terminated on Wednesday.

Borrowings under the new loan bear interest at Libor plus an applicable margin ranging between 112.5 basis points and 212.5 bps, based on the company’s credit ratings.

The unsecured credit agreement requires that the company maintain a maximum ratio of total debt to EBITDA and a minimum interest coverage ratio. The requirement to maintain a minimum interest coverage ratio may be suspended in some circumstances.

Borrowings are guaranteed by some of the company’s subsidiaries.

Flex is a Singapore-based electronics manufacturing services provider.

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