| Item 1.01 | Entry into a Material Definitive Agreement. |
As previously reported, Denali Intermediate Inc. (“Denali Intermediate”), Dell Inc. (“Dell”), Dell International L.L.C. (“Dell International”) and EMC Corporation (“EMC,” and together with Denali Intermediate, Dell, and Dell International, the “Credit Parties”), each a direct or indirect wholly-owned subsidiary of Dell Technologies Inc. (“Dell Technologies”), are party to a credit agreement (as amended, supplemented and otherwise modified from time to time, the “Senior Secured Credit Agreement”) dated as of September 7, 2016 with Credit Suisse AG, Cayman Islands Branch, as term loan B administrative agent and as collateral agent, JPMorgan Chase Bank, N.A., as term loan A / revolver administrative agent and swingline lender, and certain other financial institutions as agents, issuing banks and/or lenders, pursuant to which Dell International and EMC are the borrowers.
On March 13, 2019, the Credit Parties entered into a fifth amendment to the Senior Secured Credit Agreement (the “Fifth Amendment”) to obtain a new senior secured term loanA-6 facility consisting of an aggregate principal amount of $3,634 million termA-6 loans maturing on March 13, 2024 (the “TermA-6 Loans”), of which $2,839 million aggregate principal amount consisted of amounts outstanding under the termA-2 loans maturing on September 7, 2021 (the “TermA-2 Loans”) that rolled-over into the TermA-6 Loans. As a result, after the effectiveness of the Fifth Amendment, $1,277 million aggregate principal amount of TermA-2 Loans remained outstanding.
The TermA-6 Loans are subject to quarterly amortization payments in amounts set forth in the Fifth Amendment. Amounts outstanding under the TermA-6 Loans were drawn on March 13, 2019. The TermA-6 Loans will bear interest at LIBOR plus an applicable margin ranging from 1.25% to 2.00% or a base rate plus an applicable margin of 0.25% to 1.00%, in each case determined based on Dell’s public corporate credit rating from each of S&P and Moody’s in accordance with the pricing grid set forth in the Fifth Amendment.
The borrowers will be required to prepay outstanding TermA-6 Loans, subject to certain exceptions, with a portion of certain excess cash flow, net cash proceeds of certainnon-ordinary course asset sales or other dispositions of property, and net cash proceeds of certain debt not permitted to be incurred under the term loan facilities, in each case on terms substantially similar to the terms applicable to the TermA-2 Loans. In addition, the borrowers may voluntarily repay outstanding TermA-6 Loans at any time without premium or penalty.
Except as described in the foregoing, the TermA-6 Loans have substantially the same terms as the TermA-2 loans under the second refinancing amendment to the Senior Secured Credit Agreement, which is described in Item 1.01 of the Current Report on Form8-K filed on October 24, 2017 and was filed as Exhibit 10.1 thereto. The Senior Secured Credit Agreement contains customary events of default (including an event of default upon a change of control).
Proceeds from the TermA-6 Loans, together with the proceeds from the previously announced offering by Dell International and EMC Corporation (the“co-issuers”), of $1,000,000,000 aggregate principal amount of 4.000% First Lien Notes due 2024, $1,750,000,000 aggregate principal amount of 4.900% First Lien Notes due 2026 and $1,750,000,000 aggregate principal amount of 5.300% First Lien Notes due 2029 (collectively, the “Notes”), which is expected to close on March 20, 2019 subject to customary closing conditions, and incremental margin loan financing in an aggregate principal amount of $650 million, will be used to redeem or repay all of theco-issuers’ outstanding 3.480% first lien notes due 2019, repay all outstanding amounts under the term loanA-5 facility of the Credit Parties which matures in 2019, with any remaining proceeds to repay outstanding amounts under the Senior Secured Credit Agreement and pay related premiums, accrued interest, fees and expenses. Certain of the lenders, agents, issuing banks and/or their affiliates have provided Dell Technologies and its affiliates with financial advisory, commercial banking and investment banking services.
The foregoing description of the Fifth Amendment does not purport to be complete and is qualified in its entirety by reference to the text of the Fifth Amendment, a copy of which is filed as Exhibit 10.1 hereto and incorporated herein by reference. The Senior Secured Credit Agreement is described in Item 1.01 of the Current Report on Form8-K filed on September 9, 2016 and was filed as Exhibit 10.1 thereto. The first refinancing and incremental facility amendment to the Senior Secured Credit Agreement is described in Item 1.01 of the Current Report on Form8-K filed on March 8, 2017 and was filed as Exhibit 10.1 thereto. The second refinancing amendment and the third refinancing amendment to the Senior Secured Credit Agreement are described in Item 1.01 of the Current Report on Form8-K filed on October 24, 2017 and were filed as Exhibit 10.1 and Exhibit 10.2 thereto, respectively. The fourth refinancing amendment to the Senior Secured Credit Agreement is described in Item 1.01 of the Current Report on Form8-K filed on December 21, 2019 and was filed as Exhibit 10.1 thereto.
| 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 by reference into this Item 2.03.
