Business Context and Reporting Period
Company: Sanmina Corporation (SANM)
Filing Type: Form 8-K (Current Report)
Date of Report: July 29, 2025
Event: Entry into a Material Definitive Agreement (Credit Agreement) to facilitate the acquisition of ZT Group Int'l, Inc. ("ZT Acquisition").
Key Financial Metrics and Debt Structure
The filing details a new $3.5 billion senior secured credit facility, which is currently unfunded as of the signing date. The facility structure is as follows:
- Total Committed Facilities: $3.5 billion
- Revolving Credit Facility: $1.5 billion
- Term Loan A Facility: $2.0 billion
- Maturity: Five years from the Initial Funding Date (subject to extension).
- Interest Rates (Expected at Funding):
- Base Rate + 0.75% margin
- Term SOFR + 1.75% margin
- Pre-Funding Cost: A ticking fee of 0.25% per annum on unfunded commitments applies from the 60th day after signing until funding or termination.
Note: This filing does not provide current revenue, profit, cash flow, or existing debt balances. It focuses solely on the new credit facility terms.
Material Changes and Use of Proceeds
The new Credit Agreement replaces the existing Fifth Amended and Restated Credit Agreement (dated September 27, 2022) upon the "Initial Funding Date." The proceeds will be utilized for:
- Financing a portion of the ZT Acquisition.
- Refinancing ZT's existing credit agreement.
- Refinancing all amounts outstanding under Sanmina's existing loan agreement.
- Paying transaction fees, costs, and expenses.
- Funding working capital needs and replacing existing letters of credit.
The commitments are contingent on the closing of the ZT Acquisition. If the acquisition does not close by the "Termination Date" (the 5th business day following the "Outside Date" defined in the Equity Purchase Agreement), the commitments will terminate.
Covenants, Risks, and Outlook
Covenants (Effective upon Initial Funding Date):
- Minimum Consolidated Cash Interest Coverage Ratio: Not less than 3.00 to 1.00.
- Maximum Consolidated Total Net Leverage Ratio: Not greater than 4.00 to 1.00.
- Restrictions: Limits on incurring additional debt, granting liens, making investments, restricted payments, and asset sales.
Risks and Contingencies:
- Acquisition Failure: The credit facility is contingent on the successful closing of the ZT Acquisition.
- Interest Rate Risk: Actual interest rates at funding may differ from current estimates based on the consolidated total net leverage ratio.
- Default Events: Includes payment defaults, cross-defaults, covenant breaches, change in control, and bankruptcy events.
Investor Verification Checklist
- Verify the status and expected closing date of the ZT Group Int'l, Inc. acquisition.
- Confirm the exact "Outside Date" in the Equity Purchase Agreement to determine the Termination Date for the credit commitments.
- Review the full text of the Credit Agreement (to be filed as an exhibit) for specific definitions of "Consolidated Total Net Leverage Ratio" and "Cash Interest Coverage Ratio."
- Monitor the company's leverage ratio to ensure compliance with the 4.00x maximum covenant upon funding.
- Assess the impact of the 0.25% ticking fee on unfunded commitments if the deal timeline extends beyond 60 days.