Business Context and Reporting Period
Company: Avnet, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: November 18, 2011
Event: Entry into a new material definitive credit agreement and termination of a prior credit facility.
Key Financial Metrics and Debt Structure
This filing details a restructuring of the company's revolving credit facility rather than reporting operational financial results (revenue, profit, or cash flow).
- New Credit Facility: $1,000,000,000 senior unsecured revolving credit facility.
- Expansion Option: Subject to conditions, the facility may be increased to $1,250,000,000.
- Letters of Credit: Up to $150,000,000 available within the facility.
- Maturity Date: November 18, 2016 (5-year term).
- Security Status: All indebtedness is unsecured.
- Currencies: Loans available in U.S. Dollars, Euros, Pounds Sterling, Australian Dollars, Hong Kong Dollars, Singapore Dollars, Japanese Yen, and others.
- Interest Rate: Based on LIBOR or a Base Rate plus an applicable margin determined by long-term unsecured senior debt ratings from Moody's and S&P.
Material Changes Versus Prior Period
The company replaced its previous credit facility with a significantly larger one:
- Previous Facility: $500,000,000 senior unsecured revolving credit facility (dated September 27, 2007).
- Change in Capacity: The new facility doubles the previous borrowing capacity from $500 million to $1 billion.
- Termination: The prior facility was terminated on November 18, 2011. Avnet used available cash to repay all outstanding indebtedness and fees under the old agreement.
Outlook, Risks, and Contingencies
Covenants and Default: Borrowing is subject to compliance with specific covenants and representations. Failure to satisfy covenants or the occurrence of specified events of default could result in the acceleration of repayment obligations.
Related Parties: Some lenders or their affiliates have provided past banking services to Avnet and may continue to do so in the future for customary fees.
Management Commentary: The filing does not contain specific management commentary on operational outlook, only the terms of the financing arrangement.
Key Facts for Investor Verification
- Verify the current credit ratings from Moody's and S&P to determine the applicable interest rate margin.
- Confirm the specific financial covenants required to maintain access to the $1 billion facility.
- Review the full Credit Agreement (Exhibit 10.1) for detailed terms regarding the expansion option to $1.25 billion.
- Monitor the company's cash position to ensure it can meet interest payments and covenant requirements without triggering a default.