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Item 1.01
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Entry into a Material Definitive Agreement.
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Indenture
As previously reported, Symantec Corporation (the “Company” or “Symantec”) entered into an investment agreement (the “Investment
Agreement”) with Bain Capital Fund XI, L.P. and Bain Capital Europe Fund IV, L.P. (collectively, “Bain”) and Silver Lake Partners IV Cayman (AIV II), L.P. (“Silver Lake”, and together with Bain and their respective
designated affiliates, the “Purchasers”), relating to the issuance to the Purchasers of $1.25 billion aggregate principal amount of 2.0% convertible unsecured notes due 2021 (the “Notes”). The sale of the Notes pursuant to the
Investment Agreement was completed on August 1, 2016 (the “Investment Agreement Closing”). In connection with the Investment Agreement Closing, the Company and Wells Fargo Bank, National Association (the “Trustee”) entered
into an indenture dated as of August 1, 2016 (the “Indenture”) pursuant to which the Notes were issued to affiliates of the Purchasers.
The Notes bear interest at a rate of 2.00% per annum, payable semiannually in arrears in cash on February 15 and August 15 of each year,
beginning on February 15, 2017. The Notes will mature on August 15, 2021 (the “Maturity Date”) subject to earlier conversion.
The
Notes are convertible into cash, shares of Common Stock or a combination of cash and Common Stock, at the Company’s option, at any time prior to the close of business on the scheduled trading day immediately preceding the Maturity Date, at an
initial conversion rate of 48.9860 per $1,000 principal amount of the Notes (which represents an initial conversion price of $20.414 per share), in each case subject to certain adjustments determined in the manner set forth in the Indenture.
Holders of Notes that are converted in connection with a Make-Whole Fundamental Change, as defined in the Indenture, are, under certain circumstances, entitled to an increase in the conversion rate for such Notes based on the effective date of such
event and the applicable price attributable to the event as set forth in a table contained in the Indenture. The definition of Make-Whole Fundamental Change includes a sale of substantially all the Company’s assets, a change of the control of
the Company by way of a tender offer, merger or similar event, and the adoption of a plan relating to the Company’s liquidation or dissolution.
With
certain exceptions, upon a change of control of the Company, the holders of the Notes may require that the Company repurchase all or part of the principal amount of the Notes at a purchase price equal to the principal amount plus accrued and unpaid
interest.
The Notes are senior unsecured obligations of the Company and rank equal in right of payment to all senior unsecured indebtedness of the
Company, and will rank senior in right of payment to any indebtedness that is contractually subordinated to the Notes.
The Indenture includes customary
events of default. If an event of default, as defined in the Indenture, occurs and is continuing, either the trustee or the holders of at least 25% in aggregate principal amount of the Notes then outstanding may, subject to certain exceptions
provided in the Indenture, declare 100% of the principal of, and accrued and unpaid interest through the date of such declaration on, all the Notes to be immediately due and payable in full. In the case of certain events of bankruptcy or insolvency,
the principal amount of the Notes and any unpaid interest accrued thereon through the occurrence of such event shall automatically become and be immediately due and payable.
The foregoing description of the Indenture and the Notes is qualified in its entirety by reference to the Indenture and the form of Note, which will be filed
as exhibits to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ending July 1, 2016.
Term Loan Agreement
On August 1, 2016 (the “Closing Date”), Symantec entered into a Term Loan Agreement, by and among the Company, the administrative agent and the
financial institutions party thereto as lenders, that provides for a 3-year term loan facility in an aggregate principal amount of $200 million (the “Term A-3 Facility”) and a 5-year term loan facility in an aggregate principal amount not
to exceed $1.8 billion (the “Term A-5 Facility,” and collectively with the Term A-3 Facility, the “Term Loan Agreement”). At the closing, the Company borrowed the full amounts available under the Term A-3 Facility and the Term
A-5 Facility to be used to, among other things, fund the cash consideration for the acquisition of Blue Coat, Inc. and pay transaction-related expenses. The borrowing of the loans under the Term Loan Agreement on the Closing Date shall be subject to
limited conditionality customary in acquisition financings.
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The loans under the Term Loan Agreement bear interest, at the Company’s option, at either a rate equal to
(x) the bank’s base rate plus a margin based on the debt rating of the Company’s non-credit-enhanced, senior unsecured long-term debt (the “Alternate Base Rate”), or (y) LIBOR plus a margin based on the debt rating of
the Company’s non-credit-enhanced, senior unsecured long-term debt (the “Adjusted LIBO Rate”). Under the Term Loan Agreement, the Company may select an interest period of one, two, three or six months for each loan if the Adjusted
LIBO Rate is chosen (or, with the consent of each Lender, a shorter period or twelve months).
Payments of the principal amounts of loans under the Term
A-3 Facility are due no later than August 1, 2019 (the “Term A-3 Maturity Date”) and loans under the Term A-5 Facility are due no later than August 1, 2021 (the “Term A-5 Maturity Date”), in each case subject to
extension as provided for in the Term Loan Agreement. The Company may prepay loans under the Term Loan Agreement at any time at its option, without penalty, subject to reimbursement of certain costs in the case of borrowings that bear interest at
the Adjusted LIBO Rate. Amounts borrowed under the Term Loan Agreement may not be reborrowed once repaid.
The Term Loan Agreement contains customary
representations and warranties, affirmative and negative covenants, including a covenant that the Company maintain a ratio of consolidated funded debt to consolidated EBITDA that is less than a stated maximum of 5.50:1.00 as of the Closing Date,
decreasing to 4.75:1.00 24 months after the Closing Date. In addition, the Term Loan Agreement contains customary events of default (subject in certain instances to the Company’s right to cure) under which the Company’s payment obligations
may be accelerated and the interest rate applicable to any borrowings under the Term Loan Agreement will increase by 200 basis points, including, among others, non-payment of principal, interest or other amounts when due, inaccuracy of
representations and warranties, violation of certain covenants, payment and acceleration cross defaults with certain other indebtedness, certain undischarged judgments, bankruptcy, insolvency or inability to pay debts, the occurrence of certain
ERISA events, and the Company experiencing a change of control described in the Term Loan Agreement.
The Company’s obligations under the Term Loan
Agreement are guaranteed by certain of the Company’s U.S. subsidiaries pursuant to a Guaranty attached to the Term Loan Agreement. In addition, at the Company’s option, the loans under the Term Loan Agreement may be assumed by a foreign
subsidiary designated by the Company in accordance with the Term Loan Agreement (the “Successor Borrower”). Upon such assumption, the Company will guarantee the Successor Borrower’s obligations under the Term Loan Agreement by
becoming a party to the Guaranty and certain foreign subsidiaries of the Successor Borrower will provide subsidiary guarantees to the Successor Borrower’s obligations under the Term Loan Agreement.
In the ordinary course of their respective businesses, certain of the Lenders and the other parties to the Term Loan Agreement and their respective affiliates
have engaged, and may in the future engage, in commercial banking, investment banking, financial advisory or other services with the Company and its affiliates for which they have in the past and/or may in the future receive customary compensation
and expense reimbursement.
The foregoing description of the Term Loan Agreement is qualified in its entirety by reference to the Term Loan Agreement,
which will be filed as exhibits to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ending July 1, 2016.