Avnet unit amends credit agreement’s two financial covenants

By Wendy Van Sickle

Columbus, Ohio, Aug. 6 – Avnet, Inc.’s Avnet Holding Europe BVBA subsidiary entered into an amendment to its amended and restated credit agreement dated June 28, 2018 with Bank of America, NA as administrative agent to modify the two financial covenants, according to an 8-K filing with the Securities and Exchange Commission.

The credit agreement is scheduled to mature on June 28, 2023.

As revised, the minimum consolidated interest coverage ratio was temporarily reduced to 2.5:1 from 3:1 for each four fiscal quarter period ending on or around Sept. 30 through and including June 30, 2021.

The maximum consolidated leverage ratio was temporarily increased to a range of up to 5.25:1 commencing in the four fiscal quarter period ending Sept. 30 through the four fiscal quarter period ending Sept. 30, 2021 from 4:1.

In addition, the credit amendment included temporary increases to the applicable interest rates if the company’s debt ratings fall below certain levels; included an add-back to the formula for consolidated EBITDA of up to $100 million for restructuring charges, reserves or integration costs or expenses incurred or accrued from June 28, 2020 through June 30, 2021; and permits the company to maintain existing dividend levels subject to compliance with a maximum leverage ratio during the period from Aug. 3 to the date on which the company is confirmed to be in compliance with its financial covenants for the fiscal quarter ending on or around Dec. 31, 2021.

As of June 27, the company was in compliance with the credit agreement’s financial covenants.

The company entered into the amendment to ensure adequate liquidity to maintain its normal operations in the face of continuing uncertainty related to the scope, duration and ultimate impact of the Covid-19 pandemic on its business, results of operations and financial condition.

Avnet is a Phoenix-based distributor of electronic components, enterprise computer and storage products and IT solutions and services.

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