Item 1.01.
|
Entry into a Material Definitive Agreement.
|
On September 23, 2016, Analog Devices, Inc.
(the Company) entered into a term loan agreement and an amended and restated revolving credit agreement, as described below.
The Companys new term loan facility consists of a
3-year unsecured term loan facility in the principal amount of $2.5 billion and a 5-year unsecured term loan facility in the principal amount of $2.5 billion, and was established pursuant to a Credit Agreement (Term Loan Agreement) among
the Company, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, the several banks and other financial institutions from time to time parties thereto as lenders, JPMorgan Chase Bank, N.A., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Credit Suisse Securities (USA) LLC and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as joint lead arrangers and joint bookrunners, Bank of America, N.A., Credit Suisse AG, Cayman Islands Branch and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as
syndication agents, and Wells Fargo Bank, National Association, PNC Bank, National Association, BMO Harris Bank, N.A., DBS Bank Ltd., Sumitomo Mitsui Banking Corporation, TD Bank, N.A., The Bank of New York Mellon, Fifth Third Bank, an Ohio Banking
Corporation and Deutsche Bank Securities Inc., as documentation agents. Terms used in this Item 1.01(A) and not defined herein shall have the meanings ascribed to them in the Term Loan Agreement, which is attached to this Form 8-K as
Exhibit 10.1.
The Closing Date, and the availability of the initial borrowings under the Term Loan Agreement, is conditioned upon,
among other things, the consummation of the acquisition of Linear Technology Corporation (Linear) by the Company pursuant to the Agreement and Plan of Merger (Merger Agreement), dated as of July 26, 2016, by and among the
Company, Linear and Tahoe Acquisition Corp. (the Linear Technology Acquisition). The Commitments automatically terminate on the earlier of the making of the Loans to the Company on the Closing Date or October 26, 2017. The proceeds
of the Loans may be used by the Company to fund the Linear Technology Acquisition and to pay fees and expenses in connection therewith.
Loans can be Eurodollar Rate Loans or Base Rate Loans at the Companys option. Each Eurodollar Rate Loan will bear interest at a
rate per annum equal to the Eurodollar Rate plus a margin based on the Companys Debt Ratings from time to time of between 0.75% and 1.625% in the case of the 3-year term loan facility, and a margin of between 0.875% and 1.750% in the case of
the
5-year
term loan facility. Each Base Rate Loan will bear interest at a rate per annum equal to the Base Rate plus a margin based on the Companys Debt Ratings from time to time of between 0.00% and
0.625% in the case of the 3-year term loan facility, and a margin of between 0.00% and 0.750% in the case of the 5-year term loan facility. In addition, the Company has agreed to pay a ticking fee based on the Companys Debt Ratings from
time to time of between 0.06% and 0.25% times the actual daily amount of the Commitments in effect, accruing beginning 60 days following the effectiveness of the Term Loan Agreement and continuing until the earlier of the termination of the
Commitments and the Closing Date.
Loans under the 3-year term loan facility will be repayable in full at maturity. Loans under the 5-year
term loan facility will amortize as follows: 5.0% in each of the first two years, 10.0% in the third year, 15.0% in the fourth year and 20.0% in the fifth year, with the balance payable at maturity.
The Term Loan Agreement contains customary representations and warranties, affirmative and
negative covenants and events of default applicable to the Company and its subsidiaries. The events of default include, among others, nonpayment of principal, interest, fees or other amounts, failure to perform covenants, cross-defaults to certain
other indebtedness, insolvency or bankruptcy, customary ERISA defaults or the occurrence of a change of control. The negative covenants include limitations on liens, indebtedness, mergers and fundamental changes, and sales and other
dispositions of property. The Term Loan Agreement also requires that, following the Closing Date, the Company maintain a ratio of funded debt to EBITDA of no greater than (i) 5.00 to 1.00 for any fiscal quarter through and including the fiscal
quarter ending on or about May 5, 2018, (ii) 4.50 to 1.00 for any fiscal quarter commencing with the fiscal quarter ending on or about August 4, 2018, through and including the fiscal quarter ending on or about November 3, 2018, (iii) 4.00 to 1.00
for any fiscal quarter commencing with the fiscal quarter ending on or about February 2, 2019, through and including the fiscal quarter ending on or about November 2, 2019 and (iv) 3.00 to 1.00 for any fiscal quarter ending thereafter.
Following the consummation of the Linear Technology Acquisition, all or any portion of the Loans under the Term Loan Agreement may be assumed
by a subsidiary of the Company subject to certain conditions, including the unconditional guarantee by the Company of such subsidiarys obligations thereunder.
|
B.
|
Revolving Credit Agreement
|
The Company entered into an Amendment and Restatement
Agreement dated as of September 23, 2016 which includes an Amended and Restated Credit Agreement (Revolving Credit Agreement) among the Company, as borrower, Bank of America, N.A. as Administrative Agent, Swing Line Lender and L/C
Issuer, the several banks and other financial institutions from time to time parties thereto as lenders, JPMorgan Chase Bank, N.A., Credit Suisse Securities (USA) LLC and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as syndication agents and L/C Issuers,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, JPMorgan Chase Bank, N.A., Credit Suisse Securities (USA) LLC and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as joint lead arrangers and joint bookrunners, and Deutsche Bank Securities Inc.,
Sumitomo Mitsui Bank Corporation, Wells Fargo, National Association, BMO Harris Bank, N.A., DBS Bank Ltd., PNC Bank, National Association, TD Bank, N.A. and The Bank of New York Mellon, as documentation agents. The Revolving Credit Agreement amends
and restates the Companys existing revolving credit agreement dated as of July 10, 2015, pursuant to which the revolving credit facility was established. The revolving credit facility expires on July 10, 2020 and is currently
undrawn. Terms used in this Item 1.01(B) and not defined herein shall have the meanings ascribed to them in the Revolving Credit Agreement, which is attached to this Form 8-K as Exhibit 10.2.
Loans under the Revolving Credit Agreement can be Eurodollar Rate Loans or Base Rate Loans at the Companys option. Each Eurodollar Rate
Loan will bear interest at a rate per annum equal to the Eurodollar Rate plus a margin based on the Companys Debt Ratings from time to time of between 0.690% and 1.375%. Each Base Rate Loan will bear interest at a rate
per annum equal to the Base Rate plus a margin based on the Companys Debt Ratings from time to time of between 0.00% and 0.375%. In addition, the Company has agreed to pay a facility fee
based on the Companys Debt Ratings from time to time of between 0.06% and 0.25% times the actual daily amount of the Commitments in effect.
The Revolving Credit Agreement amends the existing revolving credit facility by, among other things:
|
|
|
revising the Consolidated EBITDA calculation to permit the add-back of certain fees, expenses and operating improvements and synergies reasonably expected to result from the Linear Technology Acquisition;
|
|
|
|
modifying the funded debt to EBITDA ratio calculation to net out any unrestricted cash of the Company consisting of net cash proceeds of any outstanding debt securities issued by the Company after July 26, 2016 and
prior to the closing of the Linear Technology Acquisition;
|
|
|
|
amending certain representations and warranties, affirmative and negative covenants and events of default to make them substantially consistent with those contained in the Term Loan Agreement described in
Item 1.01(A) above; and
|
|
|
|
modifying the interest rate margins and fees as described above.
|
Upon the consummation of the
Linear Technology Acquisition, and subject to certain other conditions, additional amendments to the Revolving Credit Agreement will become effective, including the following:
|
|
|
an increase in the aggregate commitments from $750 million to $1 billion;
|
|
|
|
modifications to the funded debt to EBITDA ratio calculation to net out, only for so long as the Companys expected short-term bridge financing facility is outstanding, any unrestricted cash of the Company up to a
cap, and to revise the maximum covenant level to (i) 5.00 to 1.00 for any fiscal quarter through and including the fiscal quarter ending on or about May 5, 2018, (ii) 4.50 to 1.00 for any fiscal quarter commencing with the fiscal quarter ending
on or about August 4, 2018, through and including the fiscal quarter ending on or about November 3, 2018, (iii) 4.00 to 1.00 for any fiscal quarter commencing with the fiscal quarter ending on or about February 2, 2019, through and including
the fiscal quarter ending on or about November 2, 2019 and (iv) 3.00 to 1.00 for any fiscal quarter ending thereafter; and
|
|
|
|
other technical amendments to align the indebtedness, fundamental changes and sales and other dispositions of property covenants with the comparable provisions in the Term Loan Agreement described in Item 1.01(A)
above.
|
The Company has agreed to pay a ticking fee based on the Companys Debt Ratings from time to time of between
0.06% and 0.25% times the actual daily amount of the increased
commitments, accruing beginning 60 days following the effectiveness of the Revolving Credit Agreement and continuing until the earlier of the closing date of the Linear Technology Acquisition and
the termination of the Merger Agreement. In addition, the Company has agreed to pay a participation fee of 0.125% of the aggregate principal amount of the commitment increase on the closing date of the Linear Technology Acquisition, if it
occurs.
The Revolving Credit Agreement contains customary representations and warranties and affirmative and negative covenants,
including, among others, limitations on liens, indebtedness of subsidiaries, mergers and other fundamental changes, and sales and other dispositions of property. The Revolving Credit Agreement also contains customary events of default, including,
among others, nonpayment of principal, interest, fees or other amounts, failure to perform covenants, cross-defaults to certain other indebtedness, insolvency or bankruptcy, customary ERISA defaults or the occurrence of a change of control.
In the ordinary course of their respective businesses, certain of the lenders and the other parties to the Term Loan Agreement and Revolving
Credit 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
received, and/or may in the future receive, customary compensation and expense reimbursement.
The foregoing descriptions of the Term Loan
Agreement and the Revolving Credit Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the Term Loan Agreement and the Amendment and Restatement Agreement (including the Revolving Credit
Agreement), which are filed as Exhibits 10.1 and 10.2 hereto, respectively, and incorporated herein by reference.