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Item 1.01 Entry into a Material Definitive Agreement.
On May 19, 2023, Seagate Technology Holdings public limited company (the “Company”) and its subsidiary Seagate HDD Cayman (the “Borrower”) entered into the eighth amendment (the “Amendment”) to the Credit Agreement, dated as of February 20, 2019, by and among the Company, the Borrower, the lenders party thereto, and The Bank of Nova Scotia, as administrative agent (as amended from time to time, the “Credit Agreement”).
The Amendment replaced the total leverage ratio with a new total net leverage ratio during a covenant relief period specified in the Credit Agreement, reduced the minimum interest coverage ratio during such covenant relief period and modified certain other covenants. The covenant relief period commenced on the effective date of the Amendment and terminates on June 27, 2025, unless earlier terminated by the Borrower upon achieving a total leverage ratio less than or equal to 3.00 to 1.00. The maximum total net leverage ratio is 6.75 to 1.00 beginning with the fiscal quarter ending June 30, 2023, with periodic step downs during the covenant relief period, shifting to a maximum total leverage ratio of 4.00 to 1.00 for any fiscal quarter ending at any time other than during the covenant relief period. The minimum interest coverage ratio is 2.50 to 1.00 beginning with the fiscal quarter ending June 30, 2023, with periodic step downs and step ups during the covenant relief period, returning to a minimum interest coverage ratio of 3.25 to 1.00 for any fiscal quarter ending after June 28, 2024, and for any fiscal quarter ending at any time other than during the covenant relief period.
The Amendment also amended the Credit Agreement to, among other things, reduce the aggregate revolving loan commitments by $250.0 million, so that the remaining aggregate revolving loan commitments equal $1.5 billion, and provide for an increase to the applicable interest rate margins for the revolving loans and term loans in the event the Borrower does not prepay at least $450.0 million aggregate principal amount of outstanding term loans by September 30, 2023.
In addition, in the event that either the Borrower does not prepay at least $450.0 million aggregate principal amount of outstanding term loans by December 29, 2023, or at least two of the Company’s corporate issuer ratings fall below specified ratings thresholds, then the Company, the Borrower and the guarantors under the Credit Agreement will be obligated to provide collateral to secure the obligations under the Credit Agreement, subject to certain limitations and exclusions. The other material terms of the Credit Agreement remain unchanged.
Certain of the lenders under the Credit Agreement and their affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with the Borrower or its affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions.
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 in Item 1.01 is incorporated by reference to this Item 2.03.
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.
SEAGATE TECHNOLOGY HOLDINGS PUBLIC LIMITED COMPANY
Date: May 22, 2023
By:
/s/ Gianluca Romano
Name:
Gianluca Romano
Title:
Executive Vice President and Chief Financial Officer