Western Digital prepays $3 billion loans; extends new loans to 2027

By Rebecca Melvin

Concord, N.H., Jan. 7 – Western Digital Corp. has prepaid its $3 billion outstanding term A-1 loans using proceeds of a new unsecured term A-2 loan due 2027 and cash on hand. It also replaced an existing $2.25 billion revolving credit facility maturing in 2023 with a new unsecured revolver maturing 2027, according to an 8-K filed with the Securities and Exchange Commission.

The Jan. 7 restatement agreement was among Western Digital, JPMorgan Chase Bank, NA, as administrative agent and its other lenders.

The new agreement also adds covenant flexibility and other modifications. The obligations under the loan agreement will be the senior unsecured obligations of Western Digital and will not benefit from any collateral or subsidiary guarantees.

The term A-2 loans bear interest at SOFR plus 112.5 basis points to 200 bps, depending on the company’s corporate family ratings from at least two rating agencies. The initial interest rate is adjusted term SOFR plus 137.5 bps.

They will amortize in equal quarterly installments of 0.625% per quarter during the first through the fourth full fiscal quarters following the Jan. 7 restatement effective date and at 1.25% a quarter for the fifth through the 19th full fiscal quarters, with the remaining balance payable after five years.

Loans under the 2027 revolver bear interest at SOFR plus 112.5 bps to 200 bps, depending on corporate family ratings, with an initial rate of SOFR plus 137.5 bps. Western Digital will also pay an unused commitment fee on the 2027 revolver of 12 bps to 35 bps based on corporate family ratings, with an initial unused commitment fee of 20 bps.

The term A-2 loans and the 2027 revolver will be subject to a financial maintenance covenant requiring Western Digital to maintain a maximum total leverage ratio, with step-ups linked to certain qualified acquisitions.

Western Digital is an Irvine, Calif.-based developer and manufacturer of storage solutions that enable people to create, manage, experience and preserve digital content.

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