Microchip gets $615 million bridge loan, amends 2018 term loan

By Marisa Wong

Los Angeles, March 23 – Microchip Technology Inc. said it entered into a commitment letter on March 21 with JPMorgan Chase Bank, NA, Truist Bank, SunTrust Robinson Humphrey, Inc., Wells Fargo Bank, NA, Wells Fargo Securities, LLC and BNP Paribas for a 364-day senior secured bridge term loan facility totaling $615 million.

The bridge loan will be used to fund the cash portion of an exchange of Microchip’s 1.625% convertible senior subordinated notes due 2025, according to a press release.

The company announced it plans to exchange $615 million of the notes for cash and stock. Funding of the bridge loan is conditioned on completion of the exchange offer.

Microchip also announced it entered into a second amendment to its amended and restated credit agreement dated May 29, 2018 with JPMorgan as administrative agent.

The amendment revises, among other things, the existing credit agreement’s financial covenants, requiring Microchip to maintain a total leverage ratio of not greater than 6.00 to 1.00 for any fiscal quarter within the first year of the amendment, 5.75 to 1.00 for any quarter in year two and 5.25 to 1.00 for any quarter after that; and a senior leverage ratio of not greater than 4.75 to 1.00 for any fiscal quarter within the first year of the amendment, 4.25 to 1.00 for any quarter in year two and 3.75 to 1.00 for any quarter after that.

Microchip Technology is a Chandler, Ariz., manufacturer of microcontroller, memory and analog semiconductors.

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