Zebra Technologies Corporation, an innovator at the edge of the enterprise with solutions and partners that enable businesses to gain a performance edge, announced actions to refinance its debt and expand liquidity.
“We are comfortable with the variable interest rate structure of our debt due to our strong operating cash flow profile and $800 million of floating-to-fixed interest rate swaps that were secured earlier this year ahead of recent rate increases.”
Debt Refinancing Highlights:
- Established 5-year $3.25 billion senior secured credit facility consisting of a $1.5 billion revolving credit facility and $1.75 billion term loan
- Retired $1.0 billion revolving credit facility and $0.9 billion term loan
- Favorable pricing on new facility by 25 basis points
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The company closed yesterday on a $3.25 billion senior secured credit facility maturing May 2027 with a lower pricing tier at SOFR + 1.00% that escalates if the Total Net Leverage Ratio is greater than 1.5x. This facility includes a $1.75 billion term loan, and a $1.5 billion revolving credit facility with $50 million drawn on the revolver as of close. The company has retired its $875 million term loan and $1.0 billion revolving facility, which had maturity dates of August 2024. Proceeds from the new term loan are also expected to fund the pending $875 million acquisition of Matrox Imaging.
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“We have significantly increased our available borrowing capacity to optimize our capital structure and align with our growing business. Our new credit facility provides us ample flexibility for organic and inorganic investment in our business, as well as share repurchases through our recently announced $1 billion incremental board authorization. Our team was also able to secure favorable terms on our debt covenants for additional capital structure flexibility, while reducing borrowing costs by approximately 25 basis points,” said Chief Financial Officer, Nathan Winters. “We are comfortable with the variable interest rate structure of our debt due to our strong operating cash flow profile and $800 million of floating-to-fixed interest rate swaps that were secured earlier this year ahead of recent rate increases.”
J.P. Morgan and Wells Fargo were Co-Left Lead Arrangers on the structuring and syndication of the facility, and Zebra engaged Proskauer as Counsel for the transaction.
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