Microchip Technology Incorporated (MCHP, Financial), a leading provider of microcontroller and analog semiconductors, has entered into a Second Amended and Restated Credit Agreement as of March 25, 2025. This agreement replaces the existing credit arrangement dated December 16, 2021, and introduces a substantial unsecured revolving loan facility.
The new credit facility offers Microchip Technology a revolving loan capacity of up to $2.25 billion, including a $250 million foreign currency sublimit, a $25 million letter of credit sublimit, and a $20 million swingline loan sublimit. As of the effective date, there are no outstanding revolving loans or letters of credit under this agreement.
The proceeds from these loans are intended for working capital and general corporate purposes. The interest rates for these revolving loans are variable, with options including a base rate plus a spread of 0.0% to 0.50%, or an adjusted daily simple SOFR rate plus a spread of 0.875% to 1.50%, among other options. These rates are contingent upon the credit ratings of Microchip Technology's senior unsecured debt.
Microchip Technology has the flexibility to borrow, repay, and reborrow under this facility until March 25, 2030. At that time, all commitments will terminate, and any outstanding loans, along with accrued interest, must be repaid. The company also has the option to prepay loans and terminate commitments without incurring penalties, subject to certain conditions.
The agreement allows for potential expansion, permitting the addition of incremental term loan facilities or increased revolving loan commitments up to an additional $1 billion, contingent on securing commitments from lenders and meeting financial covenants.
Microchip Technology's obligations under this agreement are guaranteed by certain domestic subsidiaries, with provisions for the release of these guarantees upon meeting specified conditions. The agreement includes customary covenants and events of default, ensuring robust financial management and compliance.
This strategic financial move enhances Microchip Technology's liquidity and operational flexibility, positioning the company for continued growth and stability in the semiconductor industry.
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