Celestica, a designer and manufacturer of supply chain solutions, enhanced its current credit facility, including an expansion of its borrowing capacity with improved terms.
Celestica now has an aggregate of $660.4 million of term loans outstanding compared with the $440.4 million outstanding it had on Sept. 30. The net increase in the term loans outstanding reflects the repayment of amounts borrowed under its revolving facility, which Celestica used to finance a portion of its purchase of PCI Private Limited.
The key amendments to the credit facility include: (i) the provision of a new term loan (second incremental term loan) in the original principal amount of $365 million, all of which was immediately drawn; (ii) an increase in the commitments under the revolver from $450 million to $600 million and an extension of its maturity date; and (iii) the amendment of certain other provisions, including an increase to certain exception “basket” amounts under specified restrictive covenants.
A syndicate of banks provided the second incremental term loan and increased revolver, with Bank of America acting as administrative agent. BofA Securities, Canadian Imperial Bank of Commerce and the Bank of Nova Scotia acted as joint lead arrangers and joint bookrunners, with BofA Securities as left side joint lead arranger.
Highlights of the Second Incremental Term Loan
- Celestica used the net proceeds from the second incremental term loan to repay all remaining amounts outstanding under the company’s November 2018 term loan in the original principal amount of $250 million ($145 million outstanding), terminating such loan, as well as $215 million of the $220 million borrowed under the revolver to finance a portion of the purchase price of its acquisition of PCI Private Limited.
- The second incremental term loan and the revolver each mature in March of 2025, unless either: (i) the company’s June 2018 term loan (initial term loan) is prepaid or refinanced; or (ii) commitments under the revolver are available and have been reserved to repay the initial term loan in full, in which case such obligations mature in December of 2026.
- The second incremental term loan currently bears interest at LIBOR plus 2% and is subject to quarterly principal repayments of $4,562,500. The amended credit facility also includes specified LIBOR successor provisions.
The initial term loan in the original principal amount of $350 million ($295.4 million outstanding) was unchanged by the amendment, and amounts currently outstanding thereunder mature in June 2025.