UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
(Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934)
Date of Report (Date of earliest event reported) August 28, 2006
SOLECTRON CORPORATION
(Exact name of registrant as specified in charter)
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| Delaware
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1-11098
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94-2447045 |
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| (State or other jurisdiction
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(Commission
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(IRS Employer |
| of incorporation)
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File Number)
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Identification No.) |
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| 847 Gibraltar Drive, Milpitas, California
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95035 |
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| (Address of principal executive offices)
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(Zip Code) |
Registrant’s telephone number, including area code: (408) 957-8500
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425). |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12). |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)). |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)). |
TABLE OF CONTENTS
ITEM 1.01 Entry into a Material Definitive Agreement.
On August 28, 2006, Solectron Corporation, a Delaware corporation (the “Company”) entered
into a Credit Agreement (the “Credit Agreement”) with Bank of America, N.A., as administrative
agent and collateral agent, JPMorgan Chase Bank, N.A., Citicorp USA, Inc., and The Bank of Nova
Scotia, as co-syndication agents, ABN Amro Bank N.V., as document agent, and Banc of America
Securities LLC and J.P. Morgan Securities Inc., as joint lead arrangers and joint book managers,
each issuer of letters of credit from time to time party thereto, and the lending institutions from
time to time party thereto, providing for a credit facility that amends and replaces the Company’s
Credit Agreement, dated as of August 20, 2004. The Credit Agreement provides for a revolving
multicurrency secured credit facility in an amount of up to $350 million, which may be used by the
Company or any subsidiary of the Company that becomes a borrower thereunder, to borrow revolving
loans or issue standby letters of credit, subject to a $100 million letter of credit sublimit. The
Company may, upon notice to the lenders, request an increase in the credit facility of up $150
million, to provide for an aggregate commitment of up to $500 million. There are currently no
revolving loans outstanding and approximately $2.1 million in letters of credit outstanding under
the Credit Agreement
The revolving loans under the Credit Agreement bear interest, at the Company’s option, at
either (i) the base rate, which is defined as a fluctuating rate per annum equal to the greater of
(A) Bank of America N.A.’s prime rate, or (B) the average rate on overnight federal funds plus
one-half of one percent, or (ii) a rate equal to (A) the British Bankers Association LIBOR Rate,
plus (B) an applicable margin ranging from 1.0% to 2.0% based upon the debt ratings of the
Company’s non-credit-enhanced senior unsecured long-term debt, as determined by Standard & Poor’s
Ratings Services and Moody’s Investors Service, Inc. A default interest rate shall apply on all
obligations during an event of default under the Credit Agreement at a rate per annum equal to 2.0%
above the applicable interest rate The Company is also obligated to pay other customary commitment
fees and utilization fees for a credit facility of this size and type. The Credit Agreement
matures on August 28, 2009, and may be prepaid at any time without penalty or premium at the option
of the Company.
The obligations under the Credit Agreement are guarantied by the Company’s existing and future
material United States subsidiaries, and such obligations, including the guaranties, are secured
by: (i) the Company’s and its U.S. subsidiaries’ accounts receivable, equipment and inventory, (ii), a pledge of the capital stock of the Company’s material United States subsidiaries, (iii) a
pledge of 65% of the capital stock of the Company’s and its United States subsidiaries material
first-tier foreign subsidiaries, and (iv) a pledge of certain intercompany indebtedness among the
Company and certain of its subsidiaries. In the event that the Company’s non-credit-enhanced
senior unsecured long-term debt achieves a rating of BB/Ba3 (stable/stable) or BB-/Ba2
(stable/stable) or higher from Standard & Poor’s Ratings Services and Moody’s Investors Service,
Inc., respectively, the liens on the collateral described in clause (i) above will be released.
The Credit Agreement requires the Company to comply with a leverage ratio and cash interest
coverage ratio. In additional, the Credit Agreement contains customary covenants, including
covenants that limit or restrict the Company’s and its subsidiaries’ ability to: incur liens,
incur indebtedness, make investments, dispose of assets, make certain restricted payments, merge or
consolidate, enter into certain transactions with affiliates, and enter into certain types of
burdensome agreements.
The Credit Agreement contains customary events of default, that include among other things,
non-payment defaults, covenant defaults, inaccuracy of representations and warranties,
cross-defaults to other material indebtedness, bankruptcy and insolvency defaults, material
judgment defaults, ERISA defaults and change of control defaults. The occurrence of an event of
default could result in the acceleration of the obligations under the Credit Agreement.
Bank of America N.A., the administrative agent and collateral agent under the Credit Agreement
was the administrative agent and collateral agent under Company’s amended and restated Credit
Agreement, dated as of August 20, 2004, and certain of the other lenders under the Credit Agreement
were also lenders under the amended and restated Credit Agreement.
ITEM 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance
Sheet Arrangement of a Registrant.
The information set forth under Item 1.01, “Entry into a Material Definitive Agreement,”
is incorporated herein by reference.
ITEM 8.01 Other Events.
On August 29, 2006, the Company issued a press release announcing that it had secured a
three-year, $350 million revolving credit facility. A copy of the press release is attached as
Exhibit 99.1 to this Current Report and is incorporated by reference herein.
ITEM 9.01 Financial Statements and Exhibits.
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Description |
99.1
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Press release dated August 29, 2006 announcing revolving credit facility. |