Long-Term Debt

12 Months Ended

Dec. 31, 2023

Long-Term Debt [Abstract]

Long-Term Debt

Note 6 – Long-Term Debt

Long-term debt consists of the following:

	December 31, 2023			December 31, 2022
Credit Facility	$	-		$	42,000
Convertible senior notes, due 2025		95,102			465,344
Convertible senior notes, due 2030		750,000			-
Deferred financing costs		(26,914	)		(6,407	)
		818,188			500,937
Less current portion		-			-
	$	818,188		$	500,937

Credit Facility

The Company maintains a credit agreement with a consortium of banks led by JPMorgan Chase Bank, N.A., as administrative agent, and the lenders (the "Credit Facility").  On May 8, 2023, the Company entered into an Amendment and Restatement Agreement, which provides an aggregate commitment of $750,000 of revolving loans available until May 8, 2028, replacing an agreement that was scheduled to mature on June 5, 2024.  The maturity date of the Credit Facility will accelerate if within ninety-one days prior to the maturity of the Company's convertible senior notes due 2025, the outstanding principal amount of such notes exceed a defined liquidity measure as set forth in the Credit Facility.  The Credit Facility also provides for the ability of Vishay to request up to $300,000 of incremental facilities, subject to the satisfaction of certain conditions, which could take the form of additional revolving commitments, incremental “term loan A” or “term loan B” facilities, or incremental equivalent debt.

U.S. Dollar borrowings under the Credit Facility bear interest at Secured Overnight Financing Rate ("SOFR") plus a credit spread and an interest margin.  The Credit Facility also allows for borrowings in euro, British sterling, and Japanese yen, subject to a $250,000 limit.  Borrowings in foreign currency bear interest at a local reference rate plus an interest margin.  The applicable interest margin is based on the Company's total leverage ratio.  Based on the Company's current total leverage ratio, borrowings bear interest at SOFR plus 1.60%, including the applicable credit spread.  The Company also pays a commitment fee, also based on its total leverage ratio, on undrawn amounts.  The undrawn commitment fee, based on the Company's total current leverage ratio, is 0.25% per annum. 

The Credit Facility requires the maintenance of financial covenant ratios.  For compliance purposes, pursuant to the Credit Facility, the leverage ratio is computed on a net basis, reducing the measure of outstanding debt by up to $250,000 of unrestricted cash.  The Company must maintain a net leverage ratio of at least 3.25 to 1.00. 

Borrowings under the Credit Facility are secured by a lien on substantially all assets, including  accounts receivable, inventory, machinery and equipment, and general intangibles (but excluding real estate, intellectual property registered or licensed solely for use in, or arising solely under the laws of, any country other than the United States, assets located solely outside of the United States and deposit and securities accounts), of the Company and certain significant subsidiaries located in the United States, and pledges of stock in certain significant domestic and foreign subsidiaries; and are guaranteed by certain significant subsidiaries.  

The Credit Facility limits or restricts the Company and its subsidiaries, from, among other things, incurring indebtedness, incurring liens on its respective assets, making investments and acquisitions (assuming the Company’s pro forma net leverage ratio is greater than 2.75 to 1.00), making asset sales, and paying cash dividends and making other restricted payments (assuming the Company's pro forma net leverage ratio is greater than 2.50 to 1.00), and requires the Company to comply with other covenants. 

The Credit Facility also contains customary events of default, including, but not limited to, failure to pay principal or interest, failure to pay or default under other material debt, material misrepresentation or breach of warranty, violation of certain covenants, a change of control, the commencement of bankruptcy proceedings, the insolvency of the Company or certain of its significant subsidiaries, and the rendering of a judgment in excess of $50,000 against the Company or its subsidiaries.  Upon the occurrence of an event of default under the Credit Facility, the Company's obligations under the credit facility may be accelerated and the lending commitments under the credit facility may be terminated.

At December 31, 2023 and 2022, there was $748,578 and $707,061, respectively, available under the Credit Facility. Letters of credit totaling $1,422 and $939 were outstanding at December 31, 2023 and 2022, respectively.

Convertible Debt Instruments

The following table summarizes some key facts and terms regarding the outstanding convertible senior notes as of December 31, 2023:

	Due 2025			Due 2030
Issuance date	June 12, 2018			September 12, 2023
Maturity date	June 15, 2025			September 15, 2030
Principal amount	$	95,102		$	750,000
Cash coupon rate (per annum)		2.25	%		2.25%
Conversion rate effective December 12, 2023 (per $1 principal amount)		32.1268			33.1609
Effective conversion price effective December 12, 2023 (per share)	$	31.13		$	30.16
130% of the conversion price (per share)	$	40.47		$	39.21

Convertible Senior Notes due 2030

In September 2023, the Company issued $750,000 aggregate principal amount of 2.25% convertible senior notes due 2030 (the “2030 Notes”) to qualified institutional buyers pursuant to an exemption from registration provided by Rule 144A under the Securities Act. The Company used the net proceeds from this offering to repurchase $370,242 principal amount of its outstanding 2.25% convertible senior notes due 2025 (the “2025 Notes”) (as further described below), to reduce the outstanding balance of its Credit Facility, to enter into capped call transactions (as further described below), and for other general corporate purposes.

The 2030 Notes bear interest at a rate of 2.25% per year payable semi-annually in arrears on March 15 and September 15 of each year, beginning March 15, 2024.  The 2030 Notes mature on September 15, 2030, unless earlier repurchased or converted.

The 2030 Notes are convertible into shares of Vishay common stock at an initial conversion rate of 33.1609 shares of common stock per $1 principal amount of the notes, subject to adjustment.  This initial conversion price represents a premium of 20% to the closing price of Vishay's common stock on September 7, 2023, which was $25.13 per share.  This represents an initial effective conversion price of approximately $30.16 per share.  The conversion rate of the 2030 Notes is not adjusted for quarterly cash dividends equal to or less than $0.10 per share of common stock.  Pursuant to the indenture governing the 2030 Notes, the Company is required to satisfy its conversion obligations by paying cash equal to the principal amount of notes and settle any additional value in cash and/or shares at its discretion.  Vishay must provide additional shares upon conversion if there is a "fundamental change" in the business as defined in the indenture governing the notes.

The Company may not redeem the 2030 Notes prior to September 20, 2027.  The Company may redeem for cash all or part of the 2030 Notes, at its option, on or after September 20, 2027, if the sale price of Vishay’s common stock has been at least 130% of the conversion price for a specified period at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest.  If the Company elects to redeem fewer than all of the outstanding 2030 Notes, at least $100,000 aggregate principal amount of 2030 Notes must be outstanding and not subject to redemption.

Prior to March 15, 2030, the holders of the 2030 Notes may convert their notes only under the following conditions: (1) the sale price of Vishay common stock reaches 130% of the applicable conversion price for a specified period during any fiscal quarter commencing after the fiscal quarter ending on December 31, 2023; (2) the trading price of the notes falls below 98% of the product of the last reported sale price of Vishay’s common stock and the conversion rate for a specified period; (3) the Company calls any or all of the 2030 Notes for redemption; or (4) upon the occurrence of specified corporate transactions.

Capped Call Transactions

In September 2023, in connection with the pricing and initial purchasers’ exercise in full of their option to purchase additional 2030 Notes, the Company entered into separate base and additional privately negotiated capped call transactions with an affiliate of an initial purchaser and certain other financial institutions.  The capped call will initially cover, subject to customary anti-dilution adjustments, the aggregate number of shares of the Company’s common stock that initially underlie the 2030 Notes.  The Company used $94,200 of the net proceeds from the 2030 Notes to pay the cost of the capped call transactions.  The cap price of the capped call will initially be $43.98 per share, which represents a premium of approximately 75% over the last reported sale price of the Company’s common stock on September 7, 2023, and is subject to certain adjustments under the terms of the capped call.

The capped call transactions are separate transactions entered into by the Company with each of the capped call counterparties, are not part of the terms of the 2030 Notes, and do not affect any holder’s rights under the 2030 Notes.  Holders of the 2030 Notes do not have any rights with respect to the capped call.  The capped call is classified within stockholders’ equity on the consolidated balance sheet.

Note 6 – Long-Term Debt (continued)

Convertible Senior Notes due 2025

The Company used $386,745 of the net proceeds from the offering of the 2030 Notes to repurchase $370,242 principal amount of its outstanding 2025 Notes.  As a result, the Company recognized a loss on early extinguishment of the 2025 Notes of $18,874, including the write-off of a portion of unamortized debt issuance costs.

Prior to December 15, 2024, the holders of the convertible senior notes due 2025 may convert their notes only under the following circumstances: (1) the sale price of Vishay common stock reaches 130% of the conversion price for a specified period; (2) the trading price of the notes falls below 98% of the product of the sale price of Vishay's common stock and the conversion rate for a specified period; or (3) upon the occurrence of specified corporate transactions.  The convertible senior notes due 2025 are not currently convertible.

Upon conversion of the convertible senior notes due 2025, Vishay will satisfy its conversion obligations by paying $1 cash per $1 principal amount of converted notes and settle any additional amounts due in common stock.

The quarterly cash dividend program of the Company results in adjustments to the conversion rate and effective conversion price for the convertible senior notes due 2025 effective as of the ex-dividend date of each cash dividend.  The conversion rate and effective conversion price for the convertible senior notes due 2025 is adjusted for quarterly cash dividends to the extent such dividends exceed $0.085 per share of common stock.

Other Borrowings Information

The Credit Facility, of which no amount was drawn as of December 31, 2023, expires in 2028.  The convertible senior notes mature in 2025 and 2030, respectively.

At December 31, 2023 and 2022, the Company had committed and uncommitted credit lines with various foreign banks aggregating approximately $34,000 and $1,000, respectively, with substantially no amounts borrowed.

Interest paid was $17,242, $13,739, and $14,177 for the years ended December 31, 2023, 2022, and 2021, respectively.  Deferred financing costs are recognized as non-cash interest expense.  Non-cash interest expense was $3,735, $3,272, and $3,272 for the years ended December 31, 2023, 2022, and 2021, respectively.

See Note 18 for further discussion on the fair value of the Company’s long-term debt.