Item 1.01. Entry into a Material Definitive Agreement
On January 7, 2022, Western Digital Corporation, a Delaware corporation
("Western Digital"), entered into a restatement agreement ("Restatement
Agreement") among Western Digital, JPMorgan Chase Bank, N.A., as administrative
agent (the "Agent"), and the lenders party thereto.
The Restatement Agreement amends and restates the Loan Agreement, dated as of
April 29, 2016, as amended by Amendment No. 1, dated as of August 17, 2016,
Amendment No. 2, dated as of September 22, 2016, Amendment No. 3, dated as of
March 14, 2017, Amendment No. 4, dated as of March 23, 2017, Amendment No. 5,
dated as of November 8, 2017, Amendment No. 6, dated as of November 29, 2017,
Amendment No. 7, dated as of February 27, 2018, Amendment No. 8, dated as of
May 15, 2018, Amendment No. 9, dated as of April 29, 2019 and Amendment No. 10,
dated as of July 2, 2020 (as further amended, supplemented, amended and restated
or otherwise modified from time to time including by the Restatement Agreement,
the "Loan Agreement") among Western Digital, the lenders party thereto from time
to time and the Agent to provide for, among other things, (i) the prepayment of
all outstanding term A-1 loans using the gross cash proceeds of new unsecured
term A-2 loans due 2027 in a principal amount of $3,000,000,000 (the "Term A-2
Loans") and cash on hand, (ii) a replacement of the existing $2.25 billion
revolving credit facility maturing in 2023 with a new unsecured 5-year
$2.25 billion revolving credit facility maturing in 2027 (the "2027 Revolving
Facility") and (iii) additional covenant flexibility and other modifications.
The obligations under the Loan Agreement will be the senior unsecured
obligations of Western Digital and will not benefit from any collateral or
subsidiary guarantees.
The Term A-2 Loans bear interest, at Western Digital's option, at a per annum
rate equal to either (x) the Adjusted Term SOFR Rate (as defined in the Loan
Agreement) plus an applicable margin varying from 1.125% to 2.000% or (y) a base
rate plus an applicable margin varying from 0.125% to 1.000%, in each case
depending on the corporate family ratings of Western Digital from at least two
of Standard & Poor's Ratings Services ("S&P"), Moody's Investors Service, Inc.
("Moody's") and Fitch, Inc. ("Fitch"), with an initial interest rate of Adjusted
Term SOFR plus 1.375%. The Term A-2 Loans will amortize in equal quarterly
installments of (i) 0.625% per quarter during the first through the fourth full
fiscal quarters following the date of the Restatement Agreement (the
"Restatement Effective Date") and (ii) 1.25% per quarter for the fifth through
the nineteenth full fiscal quarters following the Restatement Effective Date,
with the remaining balance payable on the date that is five years after the
Restatement Effective Date.
Loans under the 2027 Revolving Facility bear interest at a per annum rate, at
Western Digital's option, equal to either (x) the Adjusted Term SOFR Rate (as
defined in the Loan Agreement) plus an applicable margin varying from 1.125% to
2.000% or (y) a base rate plus an applicable margin varying from 0.125% to
1.000%, in each case depending on the corporate family ratings of Western
Digital from at least two of S&P, Moody's and Fitch, with an initial rate of
Adjusted Term SOFR plus 1.375%. Western Digital will also pay an unused
commitment fee on the 2027 Revolving Facility ranging from 0.120% to 0.350%
based on the corporate family ratings of Western Digital from at least two of
S&P, Moody's and Fitch, with an initial unused commitment fee of 0.200%.
The Term A-2 Loans and the 2027 Revolving Facility will be subject to a
financial maintenance covenant requiring Western Digital to maintain a maximum
total leverage ratio (with step-ups in connection with certain qualified
acquisitions).
The foregoing description is only a summary of certain provisions of the
Restatement Agreement and is qualified in its entirety by the terms of the
Restatement Agreement, a copy of which will be filed as an exhibit to the
applicable quarterly report on Form 10-Q filed by Western Digital.
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 above regarding the Restatement
Agreement is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure
Reference is made to (i) the Indenture for the 1.50% Convertible Senior Notes
due 2024 (the "2024 Notes"), dated as of February 13, 2018, by and among Western
Digital, U.S. Bank National Association ("U.S. Bank"), as trustee, and the
guarantors named therein (the "2024 Indenture") and (ii) the Indenture for the
4.750% Senior Notes due 2026 (the "2026 Notes," and together with the 2024
Notes, the "Notes"), dated as of February 13, 2018, by and among Western
Digital, U.S. Bank, as trustee, and the guarantors named therein (the "2026
Indenture," and, together with the 2024 Indenture, the "Indentures").
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On January 6, 2022, Western Digital delivered officer certificates to U.S. Bank,
in its capacity as trustee under the Indentures, to effectuate the release of
the guarantors from their guarantee of Western Digital's obligations with
respect to the Notes (the "Guarantee Release"). The Guarantee Release was
effective immediately without the taking of any further action by Western
Digital. After giving effect to the Guarantee Release, the obligations with
respect to the Notes are the senior unsecured obligations of Western Digital and
do not benefit from any subsidiary guarantees.
In accordance with General Instruction B.2 of Form 8-K, the information in this
Item 7.01 shall not be deemed to be "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise
subject to the liabilities of that section, and shall not be incorporated by
reference into any registration statement or other document filed under the
Securities Act of 1933, as amended, or the Exchange Act, except as shall be
expressly set forth by specific reference in such filing.
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