| Item 1.01 |
Entry Into a Material Definitive Agreement. |
Amended and Restated Revolving Credit Agreement
On April 14, 2023, Marvell Technology, Inc. (“Marvell” or the “Company”) entered into an amended and restated revolving credit agreement by and among Marvell, the lenders party thereto (each, a “Revolving Lender”) and Bank of America, N.A., as the administrative agent (the “Revolving Credit Agreement”). The Revolving Credit Agreement provides for borrowings of up to $1.0 billion in the form of revolving loans (“Revolving Loans”). The proceeds of the Revolving Loans will be used for general corporate purposes of Marvell and its subsidiaries. The Revolving Credit Agreement amends and restates the Revolving Credit Agreement, dated as of December 7, 2020, by and among Marvell, Marvell Technology Group Ltd., the lenders from time to time party thereto and Bank of America, N.A., as administrative agent, which provided for a $750.0 million revolving credit facility maturing in December 2025.
Amounts borrowed under the Revolving Credit Agreement bear interest, at the Company’s election, at an “alternative base rate” plus an applicable margin or at an adjusted term SOFR rate with a term of one, three or six months, plus an applicable margin. In the case of alternate base rate loans, amounts borrowed bear interest at a per annum rate equal to the “alternate base rate,” which is the higher of (i) 0.5% above the Federal Funds Effective Rate, (ii) the prime rate set by the administrative agent, (iii) 1.0% above the applicable adjusted term SOFR rate and (iv) 1.0%. In the case of term SOFR loans, amounts borrowed bear interest at a per annum rate equal to the adjusted term SOFR rate for the applicable interest period plus a margin based on ratings as set forth above, which margin initially equals 1.375%.
The amounts borrowed under the Revolving Loans must be paid in full on the fifth anniversary of the date of execution of the Revolving Credit Agreement (the “Effective Date”).
The Company may prepay any borrowing at any time without premium or penalty. The Company must pay each Revolving Lender a commitment fee, which accrues based on ratings as set forth above, and initially accrues at 0.175% per annum, on the daily unused amount of the commitment for Revolving Loans of such Revolving Lender during the period from and including the Effective Date to but excluding the date on which such commitment terminates.
The Revolving Credit Agreement requires that Marvell and its subsidiaries, subject to certain exceptions, comply with covenants relating to customary matters, including with respect to creating or permitting certain liens, entering into sale and leaseback transactions, and consolidating, merging, liquidating or dissolving. It also prohibits subsidiaries of the Company from incurring additional indebtedness, subject to certain exceptions, and requires that the Company maintain a leverage ratio as of the end of each fiscal quarter of no greater than 4.00 to 1.00.
Amounts outstanding under the Revolving Credit Agreement may become immediately due and payable upon the occurrence of specified events, including, among other things: failure to pay any obligations under the Revolving Credit Agreement that have become due; breach of certain covenants; any event or condition that results in any indebtedness or obligation with respect to hedging agreements in an aggregate outstanding principal amount of $100.0 million or more becoming due or being terminated or required to be prepaid, repurchased, redeemed or defeased prior to its scheduled maturity; filings or proceedings in bankruptcy; the Company or any material subsidiary becoming unable or admitting in writing its inability or failure generally to pay its debts as they become due; one or more final judgments in an aggregate amount in excess of $100.0 million (other than any judgment covered by insurance (other than a self-insurance program)) is rendered against the Company, any material subsidiary or any combination thereof and remains unsatisfied; certain ERISA events; and a change in control.
Certain Revolving Lenders under the Revolving Credit Agreement and/or their respective affiliates have in the past performed, and may in the future from time to time perform, investment banking, financial advisory, lending and/or commercial banking services, or other services for Marvell and its subsidiaries, for which they have received, and may in the future receive, customary compensation and expense reimbursement.
