SEC Filing Summary: SYNNEX CORPORATION (8-K)
Business Context and Reporting Period
This Form 8-K was filed on November 25, 2015, by SYNNEX Corporation (the "Company"). The report details a material definitive agreement entered into on the same date between the Company and its wholly-owned subsidiary, SYNNEX Infotec Corporation ("Infotec Japan"), with The Bank of Tokyo-Mitsubishi UFJ, Ltd., as agent, and other financial institutions.
Key Financial Metrics and Debt Structure
The filing discloses the creation of a new credit facility for Infotec Japan with the following terms:
- Total Maximum Commitment: JP¥14.0 billion.
- Term Loan: JP¥6.0 billion.
- Revolving Credit Facility: JP¥8.0 billion.
- Interest Rate: Tokyo Interbank Offered Rate (TIBOR) plus a margin of 0.70% per annum.
- Maturity Date: November 2018.
- Prepayment: The term loan may be repaid at any time prior to maturity without penalty.
- Guarantee: Infotec Japan's obligations are guaranteed by SYNNEX Corporation.
The proceeds are designated to refinance Infotec Japan's existing facility agreement in full and for other working capital and general corporate purposes.
Material Changes and Covenants
This filing represents a refinancing of existing debt rather than a change in operating performance. The new agreement imposes specific financial and operational covenants on Infotec Japan:
- Fixed Charge Coverage Ratio: Must maintain a ratio of at least 1.10 to 1.0.
- Minimum Net Worth: Must maintain a minimum net worth as defined in the agreement.
- Restrictions: Limitations on creating liens, disposing of assets, paying dividends, merging, or changing the nature of the business, subject to customary exceptions.
- Ownership Threshold: If the Company ceases to indirectly own at least 75% of Infotec Japan's issued share capital, commitments may be cancelled and obligations declared immediately due.
Outlook, Risks, and Contingencies
The agreement includes standard events of default, including non-payment, breach of representations, cross-default to other indebtedness above a threshold, insolvency, bankruptcy, and the occurrence of a Material Adverse Effect. The filing does not provide specific forward-looking guidance on revenue or earnings, as the document focuses solely on the debt restructuring.
Key Facts for Investor Verification
- Verify the exact amount of the existing facility being refinanced to assess the net change in leverage.
- Confirm Infotec Japan's current Fixed Charge Coverage Ratio to ensure compliance with the new 1.10 to 1.0 covenant.
- Review the full text of Exhibit 10.1 for specific definitions of "Material Adverse Effect" and the threshold for cross-default.
- Monitor the Company's ownership percentage in Infotec Japan to ensure it remains above the 75% threshold required to prevent immediate acceleration of debt.