Section 1 - Registrant’s Business and Operations
Item 1.01. Entry Into a Material Definitive Agreement.
Term Loan Credit Agreement
On May 30, 2023 (the “Closing Date”), TTM Technologies, Inc. (the “Company”) entered into an Amended & Restated Term Loan Credit Agreement by and among the Company, JPMorgan Chase Bank, N.A., as Administrative Agent, and the several lenders from time to time parties thereto (the “Term Loan Credit Agreement”).
The Term Loan Credit Agreement provides for a $350.0 million senior secured term loan credit facility (the “New Term Loan Facility”) that amends and restates the Company’s existing senior secured term loan credit facility that was due to expire in September 2024, under which $355.9 million of indebtedness was outstanding. In addition, the Term Loan Credit Agreement will permit the Company to add one or more senior secured incremental term loan facilities to the New Term Loan Facility subject to the satisfaction of certain conditions.
On the Closing Date, the Company used $350.0 million under the New Term Loan Facility, together with cash on hand, to refinance the full amount of indebtedness outstanding under the existing facility, as well as to pay related fees and expenses. The New Term Loan Facility borrowings bear interest at an interest rate of Term SOFR (the forward-looking secured overnight financing rate) plus a margin of 2.75%. The New Term Loan Facility also requires the Company to make quarterly principal repayments in an aggregate annual amount equal to 1% of the initial aggregate principal amount of the New Term Loan Facility beginning October 1, 2023. The New Term Loan Facility is scheduled to mature in May 2030.
The obligations under the New Term Loan Facility are unconditionally guaranteed by each of the Company’s direct and indirect, existing and future domestic subsidiaries, subject to certain exceptions (collectively, the “Guarantors”). In addition, subject to certain exclusions and limitations, the obligations of the Company and each Guarantor in respect of the New Term Loan Facility are secured by (i) a perfected first priority security interest in substantially all of the tangible and intangible assets of the Company and the Guarantors (other than the ABL Priority Collateral (as defined below)), including all of the capital stock held by the Company and the Guarantors (subject to a limitation of 65% on pledges of capital stock of certain foreign subsidiaries and domestic holding companies of foreign subsidiaries) and (ii) a perfected second priority interest in all of the ABL Priority Collateral.
The New Term Loan Facility contains certain affirmative and restrictive covenants that the Company must comply with, including (a) limitations on additional indebtedness, (b) limitations on liens, (c) limitations on investments, (d) limitations on the issuance of dividends and (e) limitations on fundamental changes, as well as other customary covenants for credit facilities of this type. Upon an event of default that is not cured or waived within any applicable cure periods, in addition to other remedies that may be available to the lenders, the obligations under the Term Loan Credit Agreement may be accelerated.
A copy of the Term Loan Credit Agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K (“Report”) and incorporated herein by reference thereto. The foregoing summary of the Term Loan Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Term Loan Credit Agreement.
ABL Credit Agreement
On May 30, 2023, the Company entered into an Amended & Restated ABL Credit Agreement by and among the Company, the several lenders from time to time parties thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Barclays Bank PLC, Bank of America, N.A. and Truist Securities, Inc. as Syndication Agents, and HSBC Securities (USA) Inc., as Documentation Agent (the “U.S. ABL Credit Agreement”).
The U.S. ABL Credit Agreement provides for a U.S. asset-based revolving credit facility with committed maximum borrowing capacity of $150.0 million (the “New U.S. ABL Facility”) that amends and restates the Company’s existing $150.0 million U.S. asset-based revolving credit facility, which was scheduled to mature in June 2024. The New U.S. ABL Facility includes a letter of credit subfacility with a sublimit of $50 million, provided that at no time may amounts outstanding under the New U.S. ABL Facility exceed in the aggregate $150.0 million or the New U.S. ABL Facility borrowing base, which is the sum of (i) a percentage of the principal amount of accounts receivable, plus (ii) a percentage of the net orderly liquidation value of (x) “Eligible Inventory,” valued at the lower of cost or market, minus (y) “Inventory Reserves” applicable thereto, minus (iii) “Reserves,” in each case as set forth or defined in the U.S. ABL Credit Agreement. In addition, the Company may increase the New U.S. ABL Facility with incremental commitments up to an additional $100.0 million or, if greater, the amount by which the New U.S. ABL Facility borrowing base exceeds commitments thereunder, subject to the satisfaction of certain conditions.
Borrowings under the New U.S. ABL Facility, which the Company may draw upon from time to time, bear interest at an interest rate of Term SOFR plus a margin ranging from 1.35% to 1.60%. The Company is also required to pay certain fees in connection with the U.S. ABL Credit Agreement, including unused commitment fees based on the average daily unused portion of the New U.S. ABL Facility, equal to 0.25% on an annual basis.
