Debt

Credit Agreement

On April 25, 2017, we entered into Amendment No. 3 ("Amendment No. 3") to our Credit Agreement dated as of January 15, 2016 (as amended and supplemented, the “Credit Agreement”) with Morgan Stanley Senior Funding, Inc. (“MSSF”), as administrative agent and collateral agent, the other agents party thereto and the lenders referred to therein. Amendment No. 3 provides for, among other things (i) new pricing terms for any revolving loans that may be outstanding from time to time under the Credit Agreement and (ii) new pricing terms for the term loan A facility. The new pricing terms do not vary depending on our consolidated net leverage ratio or any other financial maintenance covenant. Amendment No. 3 also fixes the commitment fee for the unused portion of the revolving credit facility at 0.25%.

On May 17, 2017, we entered into an Increase Revolving Joinder No. 1 to Credit Agreement (the “Increase Revolving Joinder”) with respect to an increase in revolving commitments under the Credit Agreement. The Increase Revolving Joinder provides for, among other things, a $50.0 million increase in total revolving commitments (the “Incremental Revolving Commitments”) under the Credit Agreement. After giving effect to the Increase Revolving Joinder, the Incremental Revolving Commitments are a part of the revolving credit facility under the Credit Agreement with total commitments in the amount of $375.0 million.

As of July 2, 2017, all loans under the Credit Agreement were Eurodollar Rate loans and the principal amounts outstanding and applicable interest rate information as of this date were as follows:



	Principal Outstanding		Base Rate		Base Rate Margin		Eurodollar Rate Margin		Eurodollar Floor		Applicable Rate
Revolving Facility	$	105.0	3.75	%	0.75	%	1.75	%	—	%	2.86	%
Term Loan A Facility	$	768.0	3.75	%	0.75	%	1.75	%	—	%	2.85	%
Term Loan B Facility	$	844.7	3.75	%	1.25	%	2.25	%	—	%	3.33	%

As of July 2, 2017, the fair value of principal outstanding on the Credit Agreement was $1.7 billion. We classify this valuation as a Level 2 fair value measurement.

The obligations under the Credit Agreement are collateralized by a lien on substantially all of our personal property and material real property assets, subject in each case to certain customary exceptions.

Debt issuance costs recorded as a reduction to principal outstanding in the condensed consolidated balance sheets were $37.0 million as of July 2, 2017 and $44.0 million as of October 2, 2016.

Our Credit Agreement contains financial covenants including a maximum consolidated net leverage ratio and minimum fixed charge coverage ratio and also contains other customary affirmative and negative covenants and events of default. We were in compliance with our covenants as of July 2, 2017.

Senior Unsecured Notes

On January 15, 2016, we completed the sale of $450.0 million of our 9.125% senior unsecured notes due April 2023 (the "Notes") to qualified institutional buyers and pursuant to Regulation S in a private offering exempt from the registration requirements of the Securities Act of 1933, as amended. The Notes were issued under an indenture, dated January 15, 2016, among Microsemi, the subsidiaries of Microsemi party thereto as note guarantors, and U.S. Bank National Association, as trustee (the "Indenture").

On May 25, 2017, we repurchased a portion of our Notes with an aggregate principal amount of $170.8 million for a purchase price of $201.7 million, including accrued interest. This resulted in a loss on extinguishment of debt of $32.5 million, including the associated unamortized financing costs.

As of July 2, 2017, principal outstanding on the Notes was $279.2 million and the fair value of principal outstanding was $320.8 million. We classify this valuation as a Level 1 fair value measurement.

The Notes accrue cash interest at a rate of 9.125% per year, payable semi-annually on April 15 and October 15 of each year. The Notes mature on April 15, 2023. We may redeem the Notes, and the holders of the Notes may require us to repurchase the Notes, prior to the date of maturity in certain circumstances pursuant to the terms and conditions of the Indenture. The Indenture contains customary affirmative and negative covenants and events of default.