| Item 1.01 | Entry into Definitive Material Agreement. |
On May 7, 2019 (the “Closing Date”), Broadcom Inc., a Delaware corporation (the “Company”), entered into a Credit Agreement with the lenders and L/C Issuers named therein, Bank of America, N.A., as administrative agent, and the other parties from time to time party thereto (the “Credit Agreement”). The Credit Agreement provides for a $5.0 billion unsecured revolving credit facility (the “Revolving Facility”), a $2.0 billion unsecured termA-3 facility (the “TermA-3 Facility”), a $2.0 billion unsecured termA-5 facility (the “TermA-5 Facility”) and a $2.0 billion unsecured termA-7 facility (the “TermA-7 Facility”, and together with the TermA-3 Facility and TermA-5 Facility, the “Term Facilities”). The Company’s obligations under the Credit Agreement are guaranteed on an unsecured basis by Broadcom Corporation, a California corporation, Broadcom Cayman Finance Limited, an exempted company incorporated with limited liability under the laws of the Cayman Islands, and Broadcom Technologies Inc., a Delaware corporation. The proceeds of the term loans under the Term Facilities were used to refinance the $6.0 billion of existing term loans outstanding under the Company’s Existing Credit Agreement (as defined in Item 1.02 below), which was terminated in connection with, and as a condition to, entering into the Credit Agreement, as discussed in more detail in Item 1.02 below. The Credit Agreement was entered into on substantially the same terms and conditions as the Existing Credit Agreement, other than with respect to the maturity date of the facilities thereunder, as discussed in more detail below.
The term loans under each of the TermA-3 Facility, TermA-5 Facility and TermA-7 Facility were made in single borrowings on the Closing Date and will mature and be payable in full on the third, fifth or seventh anniversary, respectively, of the Closing Date. The Revolving Facility is a five-year unsecured revolving facility. Initially, the aggregate commitment of all revolving lenders under the Credit Agreement is equal to $5.0 billion, of which up to $500 million may be utilized for the issuance of multicurrency letters of credit. The issuance of letters of credit reduces the aggregate amount otherwise available under the Revolving Facility for the making of revolving loans. Subject to the terms of the Credit Agreement, the Company may borrow, repay and reborrow revolving loans at any time prior to the earlier of (a) the fifth anniversary of the Closing Date, and (b) the date of termination in whole of the revolving lenders’ commitments under the Credit Agreement in accordance with the terms thereof. The Company had no borrowings outstanding under the Revolving Facility on the Closing Date.
Borrowings under the Revolving Facility and Term Facilities will bear interest at a fluctuating rate per annum equal to, at the Company’s option, the alternate base rate or the reserve adjusted Eurocurrency rate, in each case, plus an applicable margin that varies by facility and is calculated based on the Company’s credit ratings from time to time. In addition, the Company will also pay to the revolving lenders under the Credit Agreement certain customary fees, including a commitment fee on the daily actual excess of each lender’s revolving commitment over its outstanding revolving credit exposure under the Credit Agreement, calculated based on the Company’s credit ratings from time to time.
Voluntary prepayments of the loans and voluntary reductions of the unutilized portion of the revolving commitments under the Credit Agreement are permissible without penalty (other than customary Eurocurrency loan breakage), subject to certain conditions pertaining to minimum notice and minimum reduction amounts as described in the Credit Agreement.
The Credit Agreement contains representations and warranties and affirmative and negative covenants customary for unsecured financings of this type, as well as a financial covenant requiring that, as of the last day of each fiscal quarter, commencing with the firstquarter-end after the Closing Date, the Company’s Consolidated Interest Coverage Ratio (as defined in the Credit Agreement) shall not be less than 3.00:1.00, as more fully described in the Credit Agreement.
The Credit Agreement also contains various events of default (subject to grace periods, as applicable) including among others: nonpayment of principal, interest or fees; breach of covenant; payment default on, or acceleration under, certain other material indebtedness; inaccuracy of the representations or warranties in any material respect; bankruptcy or insolvency; certain unsatisfied judgments; certain ERISA violations; the occurrence of a change of control; and the invalidity or unenforceability of the Credit Agreement or certain other documents executed in connection therewith.
The foregoing description of the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Credit Agreement attached hereto as Exhibit 10.1 and incorporated herein by reference.
