SEC Filing Summary: TD SYNNEX CORP (Form 8-K)
Business Context and Reporting Period
Date of Report: August 7, 2018
Company: SYNNEX Corporation (TD SYNNEX CORP)
Event: Entry into a Material Definitive Agreement (Amendment to Credit Agreement).
The filing details an amendment to the company's Credit Agreement dated November 27, 2013, executed to facilitate the proposed acquisition of Convergys Corporation ("Convergys").
Key Financial Metrics and Debt Structure
This filing does not report operational financial metrics such as revenue, profit, or cash flow. It focuses exclusively on debt capacity and leverage ratios related to the Convergys acquisition:
- Additional Secured Indebtedness: Permission granted to incur up to $1,800 million in additional secured indebtedness for the Convergys acquisition.
- Convertible Debentures: Permission granted to assume Convergys' outstanding convertible debentures.
- Incremental Commitments: Ability to request increases in revolving or term loans up to $500 million, subject to a pro forma Consolidated First Lien Leverage Ratio not exceeding 2.75 to 1.00.
- Leverage Ratio Adjustment: Maximum Consolidated Leverage Ratio increased from 4.00 to 1.00 to 4.25 to 1.00. This applies from the first fiscal quarter after the Convergys closing through the fifth full fiscal quarter thereafter, reverting to 4.00 to 1.00 in the sixth quarter.
Material Changes and Contingencies
Bridge Facility Reduction: As a result of the Credit Agreement Amendment, the $1,770 million commitment for "Tranche B of the Bridge Facility" (originally dated June 28, 2018) was reduced to zero.
Conditions Precedent: With the exception of the $1,800 million secured indebtedness provision, the modifications to the Credit Agreement will not become effective unless and until the Convergys acquisition closes.
Expiration: If the Convergys acquisition does not close on or prior to December 28, 2018 (extendable to March 28, 2019 under certain circumstances), the Credit Agreement Amendment will terminate and be of no further force or effect.
Outlook and Management Commentary
The filing indicates management's intent to proceed with the Convergys acquisition, evidenced by the restructuring of debt facilities to accommodate the transaction. The reduction of the bridge facility commitment suggests a shift in financing strategy toward the amended Credit Agreement terms.
Investor Verification Checklist
- Verify the status of the Convergys Corporation acquisition and whether it has closed.
- Confirm if the $1,800 million secured indebtedness has been drawn down.
- Monitor the Consolidated Leverage Ratio to ensure compliance with the temporary 4.25 to 1.00 cap.
- Check for any extensions of the December 28, 2018 closing deadline.
- Review the full text of the Tenth Amendment to the Credit Agreement (Exhibit 10.1) for specific covenants.