Lam Research Corporation (LRCX, Financial) has announced a significant enhancement to its financial strategy by entering into a Third Amended and Restated Credit Agreement. This new agreement, effective January 27, 2025, increases the company's revolving unsecured credit facility from $1.5 billion to $2.0 billion. The agreement was made with JPMorgan Chase Bank, N.A., serving as the administrative agent, along with other participating lenders.
The expanded credit facility includes a sublimit for issuing letters of credit on behalf of Lam Research or its subsidiaries. Additionally, the agreement provides an option to further increase the facility by up to $750 million, potentially raising the total commitment to $2.75 billion. This facility is set to mature on January 25, 2030, and the proceeds are intended for general corporate purposes.
Under the terms of the agreement, Lam Research has the option to choose between two interest rate structures: a base rate with a spread of 0.00% to 0.10%, or an Adjusted Term Secured Overnight Financing Rate with a spread of 0.70% to 1.10%. Both options include a facility fee, which varies based on the company's senior unsecured long-term debt rating. As of the agreement date, no amounts were outstanding under this facility.
The agreement includes customary affirmative and negative covenants, such as the delivery of financial statements, maintenance of properties, and compliance with laws. It also imposes limitations on liens, mergers, and affiliate transactions. A financial covenant requires Lam Research to maintain a consolidated funded debt to adjusted EBITDA ratio of less than or equal to 3.50 to 1.00, with a temporary increase allowed for certain acquisitions.
In the event of default, the lenders have the right to demand immediate repayment and exercise other remedies. The agreement underscores Lam Research's commitment to maintaining financial flexibility and supporting its strategic growth initiatives.
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