Cadence Design Systems Inc.
08/15/2024 | Press release | Distributed by Public on 08/15/2024 04:12
Material Agreement Form 8 K
Item 1.01 Entry into a Material Definitive Agreement.
Credit Agreement
On August 14, 2024, Cadence Design Systems, Inc. (the "Company") entered into a $1.25 billion five-year senior unsecured revolving credit facility (the "Facility") pursuant to a credit agreement (the "Credit Agreement") with Bank of America, N.A., as a lender and administrative agent, the other lenders and issuing banks party thereto and BofA Securities, Inc., JPMorgan Chase Bank, N.A. and HSBC Bank USA, National Association, as joint lead arrangers and joint bookrunners. The Credit Agreement replaces the Company's existing revolving credit agreement, dated June 30, 2021 (as previously amended, the "Existing Credit Agreement"), among the Company, Bank of America, N.A., as a lender and administrative agent, and the other lenders party thereto.
Proceeds from the Facility may be used for working capital, capital expenditures and other general corporate purposes. Amounts outstanding under the Credit Agreement will accrue interest at a rate equal to, at the Company's option, either (1) Term SOFR (as defined in the Credit Agreement) plus a margin of between 0.625% and 1.125% per annum depending on the Company's debt rating, plus a credit spread adjustment of 0.10%, or (2) base rate plus a margin of between 0.0% and 0.125% per annum depending on the Company's debt rating. The Credit Agreement includes customary negative covenants that, among other things, restrict the Company's ability to incur additional indebtedness, grant liens and make certain asset dispositions. In addition, the Credit Agreement contains a financial covenant that requires the Company to maintain a funded debt to Consolidated EBITDA (as defined in the Credit Agreement) ratio not greater than 3.50 to 1, with a step-up to 4.00 to 1 for one year following an acquisition by the Company of at least $250 million that results in a pro forma leverage ratio between 3.25 to 1 and 3.75 to 1.
The foregoing description is qualified in its entirety by reference to the Credit Agreement, which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
Amendments to Loan Agreements
On August 14, 2024, the Company also entered into (i) an amendment (the "Amendment to 2022 Loan Agreement") to its existing loan agreement, dated September 7, 2022 (the "2022 Loan Agreement"), with Bank of America, N.A., as a lender and administrative agent, and other lenders party thereto, and (ii) an amendment (the "Amendment to 2024 Loan Agreement" and together with the Amendment to 2022 Loan Agreement, the "Amendments") to its existing loan agreement, dated May 30, 2024 (the "2024 Loan Agreement" and together with the 2022 Loan Agreement, the "Loan Agreements"), with Bank of America, N.A., as a lender and administrative agent, and the other lenders party thereto. The Amendments amend the Loan Agreements to, among other things, adjust the financial covenant such that the Company is required to maintain a funded debt to Consolidated EBITDA (as defined in the applicable Loan Agreement) ratio not greater than 3.50 to 1, with a step-up to 4.00 to 1 for one year following an acquisition by the Company of at least $250 million that results in a pro forma leverage ratio between 3.25 to 1 and 3.75 to 1.
The other material terms of the 2022 Loan Agreement and the 2024 Loan Agreement remain unchanged from those terms included in the 2022 Loan Agreement attached as Exhibit 10.01 to the Company's Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on September 8, 2022 and the 2024 Loan Agreement attached as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on June 3, 2024, respectively.
The foregoing description is qualified in its entirety by reference to the Amendments, which are attached hereto as Exhibit 10.2 and Exhibit 10.3 and are incorporated herein by reference.