Micron Technology Inc. filed SEC Form 8-K: Entry into a Material Definitive Agreement
UNITED STATES
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FORM
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| Item 1.01. | Entry into a Material Definitive Agreement. |
On March 12, 2025 (the “Closing Date”), Micron Technology, Inc. (the “Company”) entered into a revolving credit agreement and terminated its existing revolving credit agreement, as described below.
Revolving Credit Agreement
On the Closing Date, the Company entered into a Credit Agreement with HSBC Bank USA, N.A., as Administrative Agent, HSBC Securities (USA) Inc., as Sole Bookrunner and Lead Arranger, certain financial institutions as additional lead arrangers and certain financial institutions as lenders (the “Revolving Credit Agreement”). The Revolving Credit Agreement provides the Company with a committed $3.5 billion revolving credit facility (the “Revolving Credit Facility”). The Revolving Credit Facility includes a $250 million documentary credit sublimit for letters of credit and bank guarantees. The Revolving Credit Agreement also provides that, under certain circumstances, including compliance with the net leverage ratio covenant described below, the Company may, with the agreement of the lenders providing any such incremental facility, add one or more incremental revolving facilities to increase commitments under the Revolving Credit Facility in an aggregate amount not to exceed $1.5 billion. As of the date of the filing of this Current Report, there are no borrowings outstanding under the Revolving Credit Agreement, and no subsidiaries of the Company are guarantors under the Revolving Credit Agreement. The proceeds of borrowings under the Revolving Credit Facility will be used for general corporate purposes.
The Revolving Credit Facility replaced the Company’s existing $2.5 billion revolving credit facility under the Company’s Credit Agreement dated as of May 14, 2021, by and among the Company, HSBC Bank USA, N.A., as Administrative Agent, HSBC Securities (USA) Inc., as Sole Bookrunner and Joint Lead Arranger, Credit Agricole Corporate and Investment Bank, as Sustainability Structuring Agent, certain financial institutions as additional joint lead arrangers and certain financial institutions as lenders (as previously amended, the “Existing Credit Agreement”), which was otherwise due to mature on May 14, 2026.
The Revolving Credit Facility is scheduled to mature on March 12, 2030 (the “Revolving Credit Facility Maturity Date”). The Company must repay the outstanding principal amount of any outstanding loans under the Revolving Credit Facility, together with all accrued but unpaid interest, fees and other obligations owing under the Revolving Credit Agreement, on the Revolving Credit Facility Maturity Date. The Company’s obligations under the Revolving Credit Agreement are unsecured (other than any requirement for the Company to provide cash collateral for outstanding documentary credits if an event of default occurs and is continuing).
Borrowings under the Revolving Credit Facility will bear interest, at the Company’s option, at a base rate or at adjusted term SOFR, plus in either case an applicable interest rate margin varying depending on the Company’s corporate ratings. The additional interest rate margin for borrowings ranges from 0.00% to 0.50% per annum in the case of base rate borrowings and from 0.875% to 1.50% per annum in the case of adjusted term SOFR borrowings. Adjusted term SOFR is defined as the term SOFR reference rate for the selected interest period (subject to a 0.00% floor).
The Company will also pay commitment fees on the average daily unused portion of total commitments under the Revolving Credit Facility at an applicable rate varying depending on the Company’s corporate ratings. The applicable commitment fee rate ranges from 0.075% to 0.225%.
The Company is also required to pay other customary fees and costs in connection with the Revolving Credit Facility.
The Revolving Credit Agreement requires the Company to maintain, on a consolidated basis, a net leverage ratio of total net indebtedness to EBITDA, as defined in the Revolving Credit Agreement and calculated as of the last day of each fiscal quarter, not to exceed 3.25 to 1.00, subject to a temporary four fiscal quarter increase in such maximum ratio to 3.75 to 1.00 following certain material acquisitions. The replaced Existing Credit Agreement previously required the Company to maintain, on a consolidated basis, a gross leverage ratio of total gross indebtedness to EBITDA, calculated as of the last day of each fiscal quarter, not to exceed 3.25 to 1.00, subject to a temporary four fiscal quarter increase in such maximum ratio to 3.75 to 1.00 following certain material acquisitions.
The Revolving Credit Agreement contains representations and warranties, affirmative covenants and conditions precedent to borrowing usual and customary for credit agreements of this type. The Revolving Credit Agreement contains negative covenants that are substantially the same as those contained in the Existing Credit Agreement and restrict, subject to certain exceptions, the ability of the Company and its restricted subsidiaries to:
| · | in the case of the Company, consolidate with or merge with or into, or sell, assign, convey, transfer, lease, or otherwise dispose of all or substantially all of the properties, rights and assets of the Company and its restricted subsidiaries, taken as a whole, to another person; |
| · | incur, guarantee, or otherwise become liable for any indebtedness secured by a lien; |
| · | in the case of non-guarantor restricted subsidiaries, incur, guarantee, or otherwise become liable for any unsecured indebtedness; and |
| · | enter into sale and lease-back transactions. |
The Company and its restricted subsidiaries are permitted to incur, guarantee, or otherwise become liable for indebtedness, and to enter into sale and lease-back transactions, that would otherwise be prohibited under the negative covenants, in an aggregate amount equal to the greater of (x) $5.6 billion and (y) 15% of consolidated net tangible assets of the Company.
The Revolving Credit Agreement does not contain any covenant restricting the payment of dividends or the making of other restricted payments by the Company.
The following events are considered events of default under the Revolving Credit Agreement:
| · | the Company’s failure to pay principal of a loan under the Revolving Credit Agreement when due; |
| · | the Company’s failure to pay (a) any interest or scheduled fees under the Revolving Credit Agreement for 5 business days after the date when due and (b) any other obligation under the Revolving Credit Agreement for 10 business days after the date when due; |
| · | the Company’s failure to comply with the net leverage ratio described above; |
| · | the failure by the Company or any of its restricted subsidiaries to comply with any other agreement under the Revolving Credit Agreement for a period of 30 days after notice of breach; |
| · | default under any indebtedness of the Company or a guarantor subsidiary that (a) either results from (i) failure to pay any principal of such indebtedness at its stated final maturity or (ii) a default with respect to another obligation under such indebtedness and such other default results in such indebtedness becoming due and payable before its stated maturity without such indebtedness having been discharged, cured, waived, rescinded, or annulled within 30 days and (b) the principal amount of which aggregates $100 million or more; |
| · | certain events of bankruptcy, insolvency, or reorganization with respect to the Company or any of its significant subsidiaries; |
| · | an ERISA event has occurred that would reasonably be expected to result in a material adverse effect; and |
| · | any change of control of the Company. |
If an event of default described above with respect to certain events of bankruptcy, insolvency or reorganization with respect to the Company occurs and is continuing, then the lending commitments under the Revolving Credit Agreement shall automatically terminate and the principal amount plus interest, fees, and other obligations then outstanding under the Revolving Credit Agreement will automatically become due and immediately payable and outstanding documentary credit will be required to be cash collateralized without any further action or notice. If any other event of default occurs and is continuing, then the administrative agent under the Revolving Credit Agreement may terminate the revolving commitments, require the Company to provide cash collateral for outstanding documentary credits, and/or accelerate the principal amount plus interest, fees, and other obligations then outstanding under the Revolving Credit Agreement to become due and immediately payable.
The lenders under the Revolving Credit Agreement and their affiliates have engaged in, and may in the future engage in, other commercial dealings in the ordinary course of business with the Company or its affiliates, including the provision of investment banking, investment management, commercial banking and cash management services, foreign exchange and commodity hedging and equipment financing and leasing services.
| Item 1.02. | Termination of a Material Definitive Agreement. |
On the Closing Date, the Company terminated the Existing Credit Agreement. Certain financial institutions party to the Existing Credit Agreement are lenders under the Revolving Credit Agreement. The undrawn $2.5 billion revolving credit facility under the Existing Credit Agreement was replaced by the Revolving Credit Facility. The description of the Existing Credit Agreement contained in Item 1.01 of the Current Report on Form 8-K filed with the Securities and Exchange Commission (the "SEC") by the Company on May 17, 2021, is incorporated herein by reference. The Company incurred no material early termination penalties in connection with the termination of the Existing Credit Agreement.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MICRON TECHNOLOGY, INC. | |||
| Date: | March 12, 2025 | By: | /s/ Michael Ray |
| Name: | Michael Ray | ||
| Title: | Senior Vice President, Chief Legal Officer and Corporate Secretary | ||