Item 1.01
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Entry into a Material Definitive Agreement
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Credit Facilities
On the Closing Date, in connection with the Mergers, Concentrix CVG (as the surviving party following the Mergers with the Company) and certain of the Company’s U.S. domestic subsidiaries (the “
New Loan Parties
”) joined as guarantors under (i) that certain Credit Agreement, dated as of November 27, 2013, by and among SYNNEX, the guarantors identified therein, the lenders identified therein and Bank of America, N.A., as administrative agent (as amended, the “
BofA Credit Agreement
”) and (ii) that certain Credit Agreement, dated as of August 9, 2018, by and among SYNNEX, the guarantors identified therein, the lenders identified therein, and JPMorgan Chase Bank, N.A., as administrative agent (the “
JPM Credit Agreement
”).
The BofA Credit Agreement includes a $600 million commitment for a revolving credit facility and a term loan in the original principal amount of $1.2 billion. SYNNEX may request incremental commitments to increase the principal amount of the revolving line of credit or term loan by $500 million, plus an additional amount which is dependent upon SYNNEX’ pro forma first lien leverage ratio, as calculated under the BofA Credit Agreement. The BofA Credit Agreement matures in September 2022. The outstanding principal amount of the term loan is repayable in quarterly installments of $15 million, with the unpaid balance due in full on the September 2022 maturity date. Interest on borrowings under the BofA Credit Agreement can be based on LIBOR or a base rate at SYNNEX’ option, plus a margin. The margin for LIBOR loans ranges from 1.25% to 2.00% and the margin for base rate loans ranges from 0.25% to 1.00%, provided that LIBOR shall not be less than zero. The base rate is a variable rate which is the highest of (a) the Federal Funds Rate, plus a margin of 0.5%, (b) the rate of interest announced, from time to time, by the agent, Bank of America, N.A., as its “prime rate,” and (c) the Eurodollar Rate, plus 1.0%. The unused revolving credit facility commitment fee ranges from 0.175% to 0.30% per annum. The margins above the applicable interest rates and the revolving commitment fee for revolving loans are based on SYNNEX’ consolidated leverage ratio, as calculated under the BofA Credit Agreement. SYNNEX’ obligations under the BofA Credit Agreement are secured by substantially all of its, the New Loan Parties’, and certain of its other United States domestic subsidiaries’ assets on a pari passu basis with the interests of the lenders under the JPM Credit Agreement pursuant to an intercreditor agreement, and are guaranteed by the New Loan Parties and certain of its other United States domestic subsidiaries.
The JPM Credit Agreement provides for the extension of one or more term loans in an aggregate principal amount not to exceed $1.8 billion, of which $1.45 billion was advanced on the Closing Date. The JPM Credit Agreement matures in October 2023. Subject to customary conditions, SYNNEX may borrow up to five additional term loans for over the next 90 days, in an aggregate amount not to exceed $350 million. The proceeds of any loan made after the Closing Date must be used initially to repurchase or settle the outstanding Convergys convertible debentures tendered in connection with the Mergers until all such convertible debentures have been repurchased or settled, with the remaining balance available for working capital and other corporate purposes. The outstanding principal amount of the term loans made under the JPM Credit Agreement will be payable in quarterly installments in an amount equal to 1.25% commencing on the last day of the second full fiscal quarter after the Closing Date, with the unpaid balance due in full on the maturity date. Interest on borrowings under JPM Credit Agreement can be based on LIBOR or a base rate at SYNNEX’ option, plus a margin. The margin for LIBOR loans ranges from 1.25% to 1.75% and the margin for base rate loan ranges from 0.25% to 0.75%, provided that LIBOR shall not be less than zero. The base rate is a variable rate which is the highest of (a) 0.5% plus the greater of (x) the Federal Funds Rate in effect on such day and (y) the overnight bank funding rate in effect on such day, (b) the Eurodollar Rate plus 1.0% per annum, and (c) the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. A term loan commitment fee began accruing on September 26, 2018 and ranges from 0.15% to 0.25% per annum. The margins above the applicable interest rates and the term loan commitment fee are based on SYNNEX’ consolidated leverage ratio, as calculated under the JPM Credit Agreement. SYNNEX’ obligations under the JPM Credit Agreement are secured by substantially all of SYNNEX’, the New Loan Parties’ and certain of its other domestic subsidiaries’ assets on a pari passu basis with the interests of the lenders under the existing U.S. Credit Agreement pursuant to an intercreditor agreement, and are guaranteed by the New Loan Parties and certain of its other United States domestic subsidiaries.
5.75% Junior Subordinated Convertible Debentures Due 2029 Supplemental Indenture
On the Closing Date, in connection with the Mergers, Concentrix CVG entered into the First Supplemental Indenture (the “
Supplemental Indenture
”), dated as of October 5, 2018, by and between Concentrix CVG, as successor to the Company, and U.S. Bank National Association, as trustee (the “
Trustee
”), which amends and supplements the Indenture, dated as of October 13, 2009, between the Company, as issuer, and the Trustee (as amended and supplemented, the “
Indenture
”), pursuant to which the Company issued its 5.75% Junior Subordinated Convertible Debentures due 2029 (the “
Debentures
”). Among other things, the Supplemental Indenture effects certain amendments to the Indenture relating to the Mergers, including (1) changing the right to convert each $1,000 principal amount of Debentures into a right to convert such principal amount into cash and shares of common stock, par value $0.001 per share, of SYNNEX based on the consideration to be issued in the Initial Merger, and (2) Concentrix CVG’s assumption of the Company’s obligations under the Indenture.
Item 1.02
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Termination of a Material Definitive Agreement
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The information provided in the Explanatory Note of this Current Report on Form 8-K is incorporated herein by reference.
Termination of the Receivables Purchase Agreement
On the Closing Date, in connection with the Mergers, the Company terminated its credit facility evidenced by the Receivables Purchase Agreement, dated as of June 30, 2009, (as amended, supplemented or otherwise modified from time to time, the “
Receivables Purchase Agreement
”), by and among Convergys Funding Inc., Convergys, as initial servicer, Gotham Funding Corporation, MUFG Bank, Ltd. f/k/a The Bank of Tokyo-Mitsubishi UFJ, Ltd. (“
MUFG
”), New York Branch, Wells Fargo Bank, N.A., MUFG in its capacity as agent, and Wells Fargo Bank, N.A., in its capacity as administrative agent. Upon the termination of the Receivables Purchase Agreement, all of the guarantees of the obligations under the Receivables Purchase Agreement were terminated and all security interests granted under the Receivables Purchase Agreement were released.
Termination of the Revolving Credit Facility
On the Closing Date, in connection with the Mergers, the Company also terminated all commitments under the Company’s Credit Agreement, dated as of January 11, 2017 (as amended, supplemented or otherwise modified from time to time, the “
Credit Agreement
”), among the Company, the several banks and other financial institutions from time to time party thereto, and Citibank, N.A., as Administrative Agent. Upon the termination of the Credit Agreement, all of the guarantees of the obligations under the Credit Agreement were terminated.