Seagate amends credit agreement to provide covenant relief

By Wendy Van Sickle

Columbus, Ohio, May 22 – Seagate Technology Holdings plc and subsidiary Seagate HDD Cayman as borrower entered into an eighth amendment on May 19 to their credit agreement dated Feb. 20, 2019 with Bank of Nova Scotia as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

The credit agreement was amended to replace the total leverage ratio with a new total net leverage ratio during a covenant relief period specified in the credit agreement, reduce the minimum interest coverage ratio during such covenant relief period and modify some other covenants.

The covenant relief period terminates on June 27, 2025, unless earlier terminated by the borrower upon achieving a total leverage ratio less than or equal to 3.00 to 1.00. The maximum total net leverage ratio is 6.75 to 1.00 beginning with the fiscal quarter ending June 30, 2023, with periodic step downs during the covenant relief period, shifting to a maximum total leverage ratio of 4.00 to 1.00 for any fiscal quarter ending at any time other than during the covenant relief period.

The minimum interest coverage ratio is 2.50 to 1.00 beginning with the fiscal quarter ending June 30, with periodic step downs and step ups during the covenant relief period, returning to a minimum interest coverage ratio of 3.25 to 1.00 for any fiscal quarter ending after June 28, 2024 and for any fiscal quarter ending at any time other than during the covenant relief period.

The amendment also amended the credit agreement to, among other things, reduce the aggregate revolving loan commitments by $250 million, so that the remaining aggregate revolving loan commitments equal $1.5 billion, and provide for an increase to the applicable interest rate margins for the revolving loans and term loans in the event the borrower does not prepay at least $450 million aggregate principal amount of outstanding term loans by Sept. 30, 2023.

In addition, in the event that either the borrower does not prepay at least $450 million principal amount of outstanding term loans by Dec. 29, 2023, or at least two of the company’s corporate issuer ratings fall below specified ratings thresholds, then the company, the borrower and the guarantors under the credit agreement will be obligated to provide collateral to secure the obligations under the agreement, subject to certain limitations and exclusions.

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

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.