Business Context and Reporting Period
Company: Knowles Corporation
Filing Type: Form 8-K (Current Report)
Date of Report: October 11, 2017
Event: Entry into a new material definitive agreement (Credit Facility) and termination of the prior credit agreement.
Key Financial Metrics and Debt Structure
This filing details the restructuring of the Company's debt facilities rather than reporting operational financial results (revenue, profit, or cash flow) for a specific period.
- New Credit Facility Amount: Up to $400,000,000 aggregate principal.
- Facility Type: Five-year senior secured revolving credit facility.
- Currency Options: Up to $100,000,000 available in Euro, Sterling, and other currencies.
- Letters of Credit: Up to $50,000,000 available.
- Swingline Facility: Up to $20,000,000 in US dollars.
- Incremental Capacity: Option to increase commitments or establish term loans up to an additional $200,000,000.
- Interest Rate Basis: LIBOR/EURIBOR or Alternate Base Rate (ABR) plus an Applicable Margin based on the Company's total leverage ratio.
- Collateral: Secured by a perfected pledge of all capital stock/equity interests held by the Company and guarantors (limited to 65% of voting equity for foreign subsidiaries).
Material Changes Versus Prior Period
On October 11, 2017, Knowles Corporation terminated its previous Credit Agreement dated January 27, 2014 (as amended). This was immediately replaced by the New Credit Facility described above. The new facility is intended to refinance indebtedness under the prior agreement and provide funds for working capital and general corporate purposes.
Outlook, Risks, and Contingencies
- Maturity Date: The facility matures on October 11, 2022.
- Contingent Termination: If the Company's 3.25% Convertible Senior Notes Due November 1, 2021, are not repaid, refinanced, or converted by April 30, 2021, the New Credit Facility commitments will terminate and loans will mature on that earlier date.
- Management Commentary: The filing does not provide specific management commentary on operational outlook, only the terms of the financing arrangement.
Investor Verification Checklist
- Verify the current outstanding balance under the new $400 million facility versus the prior agreement.
- Confirm the status of the 3.25% Convertible Senior Notes due 2021 to assess the risk of early termination of the credit facility in 2021.
- Review the Company's total leverage ratio to determine the current Applicable Margin (interest rate spread).
- Examine the full text of the Credit Agreement (Exhibit 10.1) for specific financial covenants and restrictions.