Item 1.01 Entry into a Material Definitive Agreement.
On February 21, 2020, Applied Materials, Inc. ("Applied") entered into a credit
agreement (the "Credit Agreement") for a five-year $1.5 billion revolving credit
facility with JPMorgan Chase Bank, N.A., as administrative agent, and the
lenders party thereto (collectively, the "Lenders").
The Credit Agreement replaces a $1.5 billion credit agreement, dated
September 3, 2015, by and among Applied and certain lenders, as amended and
extended, as described further in Item 1.02 below.
The Credit Agreement provides for unsecured borrowings in an initial amount not
to exceed $1.5 billion outstanding at any one time and includes a sub-facility
for the issuance of letters of credit of up to $400 million. The Credit
Agreement includes a provision under which Applied may increase the total amount
of the revolving credit facility to no more than $2.0 billion, subject to the
receipt of commitments from one or more Lenders for any such increase and other
customary conditions.
Borrowings under the Credit Agreement will bear interest, at Applied's option,
at a rate per annum equal to either (1) the London interbank offered rate,
adjusted for any statutory reserve requirements for eurocurrency liabilities
(but in no event less than zero) ("Adjusted LIBOR") or (2) a rate (the "Base
Rate") equal to the highest of (a) the rate of interest published by The Wall
Street Journal from time to time as the "Prime Lending Rate," (b) a rate that is
0.5% higher than the federal funds effective rate (as the Federal Reserve Bank
of New York shall set forth on its public website from time to time) and
(c) Adjusted LIBOR plus 1.0%, in either case, plus the applicable margin. The
applicable margin will range, depending on Applied's public debt credit ratings,
from 0.625% to 1.125% during such period that Applied has elected that any
borrowings under the Credit Agreement shall bear interest based on Adjusted
LIBOR and from zero to 0.125% during such period that Applied has elected that
any borrowings under the Credit Agreement shall bear interest based on the Base
Rate. In addition, the Credit Agreement requires Applied to pay commitment fees
on the unused commitments under the Credit Agreement ranging, depending on
Applied's public debt credit ratings, from 0.05% to 0.125% per annum and
customary agency and letter of credit participation fees.
The Credit Agreement contains certain affirmative and negative covenants
customary for credit facilities of this type. The Credit Agreement also contains
a financial covenant that requires Applied to maintain as of the end of each
fiscal quarter a ratio of (i) consolidated funded debt as of such date to
(ii) consolidated adjusted EBITDA for the four fiscal quarter period ending on
such date of not greater than 3.50 to 1.00 (which maximum ratio may be
temporarily increased, at the election of Applied, to 4.00 to 1.00 following
certain material acquisitions). The Credit Agreement also contains customary
events of defaults. The occurrence of an event of default would permit the
Lenders to terminate their commitments to advance loans under the Credit
Agreement and to require immediate repayment of any outstanding loans under the
Credit Agreement.
Proceeds from borrowings under the Credit Agreement are available to be used for
general corporate purposes. The maturity date of the Credit Agreement is
February 21, 2025, at which time the outstanding amount of loans under the
Credit Agreement, if any, must be repaid in full.
The foregoing description of the Credit Agreement does not purport to be
complete and is qualified in its entirety by the full text of the Credit
Agreement, which is filed as Exhibit 10.1 hereto and is incorporated herein by
reference.
The Lenders, and certain of their affiliates, have engaged in, and/or in the
future may engage in, banking and other transactions with Applied, including
previous credit facilities. These parties have received, and/or in the future
may receive, customary compensation from Applied for these services.
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Item 1.02 Termination of a Material Definitive Agreement.
On September 3, 2015, Applied entered into a $1.5 billion credit agreement with
certain lenders, which was previously amended and extended and which was due to
expire on September 3, 2021 (the "Prior Credit Agreement"). On February 21,
2020, the Prior Credit Agreement was terminated and replaced by the Credit
Agreement described under Item 1.01 above. There were no outstanding amounts due
under the Prior Credit Agreement.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
As discussed under Item 1.01 above, on February 21, 2020, Applied entered into
the Credit Agreement. The information set forth in Item 1.01 is incorporated
herein by reference. Applied has not made any borrowings under the Credit
Agreement as of this date.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
No. Description
10.1 Credit Agreement, dated as of February 21, 2020, among Applied
Materials, Inc., JPMorgan Chase Bank, N.A., as administrative agent,
and the other lenders named therein
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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