Seagate Technology adds $1.2 billion term loans in two tranches

By Marisa Wong

Los Angeles, Oct. 15 – Seagate Technology Holdings plc and subsidiary Seagate HDD Cayman entered into an amendment on Oct. 14 to the credit agreement dated Feb. 20, 2019 with Bank of Nova Scotia as administrative agent for a new term loan facility totaling $1.2 billion, according to an 8-K filing with the Securities and Exchange Commission.

The term loan is to be extended in two tranches of $600 million each.

The term loan A1 is repayable in quarterly installments beginning on Dec. 31, 2022 and is scheduled to mature on Sept. 16, 2025. The loan will bear interest at Libor plus a variable margin ranging from 112.5 basis points to 237.5 bps that will be determined based on the Seagate’s corporate credit rating.

The term loan A2 is repayable in quarterly installments beginning on Dec. 31, 2022 and is set to mature on July 30, 2027. The loan bears interest at Libor plus 125 bps to 250 bps, depending on ratings.

Each loan was drawn in full on the closing date for the amendment.

The current interest rate for term loan A1 has been set at Libor plus 162.5 bps and for term loan A2 at Libor plus 175 bps.

Proceeds of the term loan A1 and term loan A2 may be used for general corporate purposes, to refinance or repay Seagate HDD Cayman’s existing term loan and to refinance or repay its senior notes due March 2022.

On the closing date, Seagate HDD Cayman used part of the proceeds from term loan A1 to repay in full the $475 million principal amount outstanding under its existing term loan. With this repayment, gross debt will increase by a total of $725 million.

The term loans are guaranteed by the same guarantors that guarantee the existing obligations under the credit agreement.

In addition, the amendment extends the maturity date for the revolving loan commitments under the credit agreement to Oct. 14, 2026, increases the revolving commitments to $1.75 billion and modifies the interest rate margins for the revolving loans to Libor plus a margin ranging from 112.5 bps to 237.5 bps depending on ratings. As of Oct. 14, no revolving loans were outstanding under the credit agreement.

The other material terms of the credit agreement remain unchanged, the filing noted.

Seagate is a Cupertino, Calif.-based data storage company.

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