Flex enters $2.25 billion revolving, term loan credit agreement

By Marisa Wong

Morgantown, W.Va., June 30 – Flex Ltd. entered into a new $2,252,500,000 credit agreement on Friday, according to an 8-K filing with the Securities and Exchange Commission.

Bank of America Merrill Lynch, Citigroup Global Markets Inc., BNP Paribas Securities Corp., HSBC Securities (USA), Inc., Industrial and Commercial Bank of China Ltd., New York Branch, JPMorgan Chase Bank, NA, Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corp., Bank of Nova Scotia, MUFG and U.S. Bank, NA are joint lead arrangers and joint bookrunners. Bank of America, NA is administrative agent, and Citibank, NA is syndication agent.

The new facility, which matures on June 30, 2022, consists of a $1.75 billion revolving credit facility with a $300 million sublimit for swingline loans and a $150 million sublimit for the issuance of letters of credit and a $502.5 million term loan facility.

The company may add one or more incremental term loan facilities or increase the revolving commitments in an aggregate amount up to $500 million.

On the closing date, the company borrowed $502.5 million under the term loan to repay $502.5 million of outstanding term loans and other amounts due under the company’s $2 billion credit agreement dated March 31, 2014. The existing term loans were scheduled to mature on March 31, 2019.

The new credit facility replaced the existing facility, which was terminated on Friday.

Borrowings under the new facility bear interest at Libor plus an applicable margin ranging from 112.5 basis points to 187.5 bps, based on the company’s credit ratings. The company is required to pay a quarterly commitment fee on the unutilized portion of the revolving credit commitments ranging from 15 bps to 30 bps, also depending on credit ratings. If the company has not been assigned debt ratings, the applicable margin is 187.5 bps, and the commitment fee is 30 bps.

The credit agreement requires that the company maintain a maximum ratio of total indebtedness to EBITDA and a minimum interest coverage ratio.

Formerly Flextronics International Ltd., Flex is a Singapore-based electronics manufacturing services provider.

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