| Item 1.01 | Entry into a Material Definitive Agreement. |
Amendment of a Material Definitive Agreement
On August 7, 2018, SYNNEX Corporation (“SYNNEX”) entered into an amendment to its Credit Agreement, initially dated as of November 27, 2013 (as amended from time to time, the “Credit Agreement”), with the lenders party thereto, Bank of America, N.A., as administrative agent, and certain United States subsidiaries of SYNNEX, as guarantors (the “Credit Agreement Amendment”). Among other things, the Credit Agreement Amendment amends the Credit Agreement by:
| | • | | permitting SYNNEX to incur up to $1,800 million of additional secured indebtedness in connection with the acquisition of Convergys Corporation (“Convergys”); |
| | • | | permitting SYNNEX to assume indebtedness of Convergys in respect of its outstanding convertible debentures; |
| | • | | increasing the amount of incremental commitments for revolving loans or term loans SYNNEX is capable of requesting, such that the aggregate amount of all such increases will not exceed $500 million,plus an amount such that SYNNEX’ Consolidated First Lien Leverage Ratio (as defined in the Credit Agreement) on a pro forma basis, is not greater than 2.75 to 1.00; and |
| | • | | increasing the maximum Consolidated Leverage Ratio (as defined in the Credit Agreement) that SYNNEX is required to maintain from 4.00 to 1.00 to 4.25:1.00, but only from and after the first fiscal quarter ending after the closing of the Convergys acquisition through and including the fifth full fiscal quarter ending after the closing of the Convergys acquisition; such that from and after the sixth full fiscal quarter ending after the closing of the Convergys acquisition the maximum Consolidated Leverage Ratio that SYNNEX is required to maintain would return to 4.00 to 1.00. |
With the exception of the first bullet set forth above, the modifications to the Credit Agreement set forth in the Credit Agreement Amendment will not become effective unless and until the closing of the Convergys acquisition occurs. In addition, if the closing of the Convergys acquisition does not occur on or prior to December 28, 2018 (which may be extended to March 28, 2019 in certain circumstances), the Credit Agreement Amendment will terminate and be of no further force and effect.
The foregoing description of the Credit Agreement Amendment is qualified in its entirety by reference to the full text of the Credit Agreement Amendment which is attached hereto and filed as Exhibit 10.1 to this Current Report on Form8-K and is incorporated herein by reference.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under anOff-Balance Sheet Arrangement of a Registrant. |
The information provided in Item 1.01 of this report is incorporated herein by reference.
As a result of the entry into the Credit Agreement Amendment as described in Item 1.01 above, the $1,770 million commitment with respect to “Tranche B of the Bridge Facility” under SYNNEX’ Commitment Letter, dated as of June 28, 2018, by and among SYNNEX, JPMorgan Chase Bank, N.A., Bank of America, N.A. and Merrill Lynch, Pierce, Fenner & Smith Incorporated (filed as exhibit 10.1 to the Form8-K filed by SYNNEX on July 2, 2018), was reduced to zero.
