Western Digital (WDC)

 

WESTERN DIGITAL CORPORATION

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 

The $750 million available under the Credit Facility was borrowed on February 11, 2008 and was used, together with additional cash from the accounts of WDTI, to repay in full the $760 million previously borrowed under a bridge facility that had been used to fund the Acquisition. As of June 27, 2008, the Company repaid the amounts borrowed under the revolving credit facility leaving $250 million available for future borrowings.

 

Borrowings under the Credit Facility bear interest at a rate equal to, at the option of WDTI, either (a) a LIBOR rate determined by reference to the cost of funds for Eurodollar deposits for the interest period relevant to such borrowing, adjusted for certain additional costs (the “Eurocurrency Rate”) or (b) a base rate determined by reference to the higher of (i) the federal funds rate plus 0.50% and (ii) the prime rate as announced by JPMorgan Chase Bank, N.A. (the “Base Rate”), in each case plus an applicable margin. The applicable margin for borrowings under the term loan facility ranges from 1.25% to 1.50% with respect to borrowings at the Eurocurrency Rate and 0.0% to 0.125% with respect to borrowings at the Base Rate. The applicable margin for revolving loan borrowings under the revolving credit facility ranges from 0.8% to 1.125% with respect to borrowings at the Eurocurrency Rate and 0.0% to 0.125% with respect to borrowings at the Base Rate. The applicable margins for borrowings under the Credit Facility are determined based upon a leverage ratio of the Company and its subsidiaries calculated on a consolidated basis. The interest rate at June 27, 2008 was 3.75%.

 

In addition to paying interest on outstanding principal under the Credit Facility, WDTI is required to pay a facility fee to the lenders under the revolving credit facility in respect of the aggregate revolving commitments thereunder. The facility fee rate ranges from 0.20% to 0.375% per annum and is determined based upon a leverage ratio of the Company and its subsidiaries calculated on a consolidated basis. WDTI is also required to pay letter of credit fees (a) to the revolving credit facility lenders on the aggregate face amount of all outstanding letters of credit equal to an applicable margin in effect with respect to the Eurocurrency Rate borrowings under the revolving credit facility and (b) to the letter of credit issuer computed at a rate equal to 0.125% per annum on the face amount of the letter of credit, plus such letter of credit issuer’s customary documentary and processing fees and charges.

 

Beginning on June 30, 2009, WDTI is required under the term loan facility to make regularly scheduled payments of principal in quarterly installments equal to a percentage of the original principal amount of the term loan as follows: 3.75% per quarter for each of the four quarters ended June 30, 2009, September 30, 2009, December 31, 2009 and March 31, 2010, 5% per quarter for each of the four quarters ended June 30, 2010, September 30, 2010, December 31, 2010 and March 31, 2011, 6.25% per quarter for each of the four quarters ended June 30, 2011, September 30, 2011, December 31, 2011 and March 31, 2012, and 10% per quarter for each of the three quarters ended June 30, 2012, September 30, 2012 and December 31, 2012, with the balance due and payable at maturity on February 11, 2013.

 

The Credit Facility requires WDTI to comply with a leverage ratio and an interest coverage ratio calculated on a consolidated basis for the Company and its subsidiaries. In addition, the Credit Facility contains customary covenants, including covenants that limit or restrict WDTI’s and its subsidiaries’ ability to: incur liens, incur indebtedness, make certain restricted payments, merge or consolidate and enter into certain speculative hedging arrangements. Upon the occurrence of an event of default under the Credit Facility, the lenders may cease making loans, terminate the Credit Facility and declare all amounts outstanding to be immediately due and payable. The Credit Facility specifies a number of events of default (some of which are subject to applicable grace or cure periods), including, among others, non-payment defaults, covenant defaults, cross-defaults to other material indebtedness, bankruptcy and insolvency defaults and material judgment defaults. As of June 27, 2008, WDTI was in compliance with all covenants.

 

The obligations of WDTI under the Credit Facility are guaranteed by the Company and WDTI’s wholly-owned subsidiary, WD Media.

 

 

On February 11, 2008, Western Digital Technologies, Inc.
(“WDTI”), a wholly owned subsidiary of the Company,
entered into a five-year Credit Agreement (the “Credit
Facility”) with JPMorgan Chase Bank, N.A., as
administrative agent, Citigroup Global Markets Inc., as
syndication agent, JP Morgan Securities Inc. and Citigroup
Global Markets Inc., as arrangers, and Bank of America, N.A.,
HSBC Bank USA, National Association and The Royal Bank of
Scotland plc, as co-documentation agents, and lenders party
thereto.

 

The Credit Facility provides for a $750 million unsecured
loan consisting of a $500 million term loan facility and a
$250 million revolving credit facility. The revolving
credit facility includes borrowing capacity available for
letters of credit and for short-term borrowings referred to as
swingline. In addition, WDTI may elect to expand the Credit
Facility by up to $250 million if existing or new lenders
provide additional term or revolving commitments.

 

WESTERN
DIGITAL CORPORATION

 

NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)

 

The $750 million available under the Credit Facility was
borrowed on February 11, 2008 and was used, together with
additional cash from the accounts of WDTI, to repay in full the
$760 million previously borrowed under a bridge facility
that had been used to fund the Acquisition. As of June 27,
2008, the Company repaid the amounts borrowed under the
revolving credit facility leaving $250 million available
for future borrowings.

 

Borrowings under the Credit Facility bear interest at a rate
equal to, at the option of WDTI, either (a) a LIBOR rate
determined by reference to the cost of funds for Eurodollar
deposits for the interest period relevant to such borrowing,
adjusted for certain additional costs (the “Eurocurrency
Rate”) or (b) a base rate determined by reference to
the higher of (i) the federal funds rate plus 0.50% and
(ii) the prime rate as announced by JPMorgan Chase Bank,
N.A. (the “Base Rate”), in each case plus an
applicable margin. The applicable margin for borrowings under
the term loan facility ranges from 1.25% to 1.50% with respect
to borrowings at the Eurocurrency Rate and 0.0% to 0.125% with
respect to borrowings at the Base Rate. The applicable margin
for revolving loan borrowings under the revolving credit
facility ranges from 0.8% to 1.125% with respect to borrowings
at the Eurocurrency Rate and 0.0% to 0.125% with respect to
borrowings at the Base Rate. The applicable margins for
borrowings under the Credit Facility are determined based upon a
leverage ratio of the Company and its subsidiaries calculated on
a consolidated basis. The interest rate at June 27, 2008
was 3.75%.

 

In addition to paying interest on outstanding principal under
the Credit Facility, WDTI is required to pay a facility fee to
the lenders under the revolving credit facility in respect of
the aggregate revolving commitments thereunder. The facility fee
rate ranges from 0.20% to 0.375% per annum and is determined
based upon a leverage ratio of the Company and its subsidiaries
calculated on a consolidated basis. WDTI is also required to pay
letter of credit fees (a) to the revolving credit facility
lenders on the aggregate face amount of all outstanding letters
of credit equal to an applicable margin in effect with respect
to the Eurocurrency Rate borrowings under the revolving credit
facility and (b) to the letter of credit issuer computed at
a rate equal to 0.125% per annum on the face amount of the
letter of credit, plus such letter of credit issuer’s
customary documentary and processing fees and charges.

 

Beginning on June 30, 2009, WDTI is required under the term
loan facility to make regularly scheduled payments of principal
in quarterly installments equal to a percentage of the original
principal amount of the term loan as follows: 3.75% per quarter
for each of the four quarters ended June 30, 2009,
September 30, 2009, December 31, 2009 and
March 31, 2010, 5% per quarter for each of the four
quarters ended June 30, 2010, September 30, 2010,
December 31, 2010 and March 31, 2011, 6.25% per
quarter for each of the four quarters ended June 30, 2011,
September 30, 2011, December 31, 2011 and
March 31, 2012, and 10% per quarter for each of the three
quarters ended June 30, 2012, September 30, 2012 and
December 31, 2012, with the balance due and payable at
maturity on February 11, 2013.

 

The Credit Facility requires WDTI to comply with a leverage
ratio and an interest coverage ratio calculated on a
consolidated basis for the Company and its subsidiaries. In
addition, the Credit Facility contains customary covenants,
including covenants that limit or restrict WDTI’s and its
subsidiaries’ ability to: incur liens, incur indebtedness,
make certain restricted payments, merge or consolidate and enter
into certain speculative hedging arrangements. Upon the
occurrence of an event of default under the Credit Facility, the
lenders may cease making loans, terminate the Credit Facility
and declare all amounts outstanding to be immediately due and
payable. The Credit Facility specifies a number of events of
default (some of which are subject to applicable grace or cure
periods), including, among others, non-payment defaults,
covenant defaults, cross-defaults to other material
indebtedness, bankruptcy and insolvency defaults and material
judgment defaults. As of June 27, 2008, WDTI was in
compliance with all covenants.

 

The obligations of WDTI under the Credit Facility are guaranteed
by the Company and WDTI’s wholly-owned subsidiary, WD Media.