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Item 1.01
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Entry into a Material Definitive Agreement
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Super Micro Computer Inc., Taiwan (the “Subsidiary”), a Taiwan corporation and wholly-owned subsidiary of Super Micro Computer, Inc. (the “Company) was party to (i) that certain credit agreement, dated May 6, 2020, with CTBC Bank Co., Ltd. (“CTBC Bank”), which provided for a non-revolving term loan facility to obtain up to NTD1,200.0 million ($40.7 million U.S. dollar equivalent) and (ii) that certain credit agreement, dated August 24, 2020, with CTBC Bank, which provided for total borrowings of up to $50.0 million (the “Prior CTBC Credit Lines”).
On July 20, 2021 (the “Effective Date”), the Subsidiary entered into a general agreement for omnibus credit lines with CTBC Bank, which replaces the Prior CTBC Credit Lines in their entirety and permits for borrowings, from time to time, of (i) a term loan facility of up to NTD1,550.0 million and (ii) a line of credit facility of up to US$105.0 million (the “New CTBC Credit Lines”). Interest rates are to be established according to individual credit arrangements established pursuant to the New CTBC Credit Lines, which interest rates shall be subject to adjustment depending on the satisfaction of certain conditions. Term loans made pursuant to the New CTBC Credit Lines are secured by certain of the Subsidiary’s assets, including certain property, land, plant, and equipment. As of June 30, 2021, the net book value of land and building located in Bade, Taiwan, collateralizing the New CTBC Credit Facility term loan was $70.7 million. The Subsidiary is subject to various financial covenants under the New CTBC Credit Lines, including current ratio, debt service coverage ratio, and financial debt ratio requirements. In the event the Subsidiary does not satisfy such financial covenants, CTBC Bank is permitted to, among other things, reduce the permitted total borrowings to a cap of $70.0 million from $105.0 million. Additional covenants require, among other things, the Company to maintain ownership of all of the capital stock of the Subsidiary and prohibit secondary mortgages on certain assets securing the New CTBC Credit Lines. The New CTBC Credit Lines have customary default provisions permitting CTBC Bank to suspend the extension of credit, reduce the credit line, shorten the credit extension term, or declare all principal and interest amounts immediately due and payable.
The Subsidiary intends to use borrowings under the New CTBC Credit Lines to finance the expansion of renovation of the Company’s Bade Manufacturing Facility located in Taiwan. The Subsidiary also intends to use borrowings under the New CTBC Credit Lines to provide term loans and/or revolving lines of credit based upon eligible accounts receivable and accounts payable (vendor invoices). Under the New CTBC Credit Lines, the Subsidiary has established (i) a NTD1,250.0 million term loan facility that includes a NTD100.0 million guarantee line ($44.8 million U.S. dollar equivalent), (ii) a USD$105.0 million export/import loan facility, (iii) a NTD1,200.0 million ($43.0 million U.S. dollar equivalent) term loan specifically for the new building in Taiwan, and (iv) a NTD350.0 million ($12.5 million U.S. dollar equivalent) term loan facility for equipment and machinery (collectively, the “New Borrowings”).
Amounts outstanding under the Prior CTBC Credit Lines on the Effective Date (the “Outstanding Borrowings”) were assumed by the New CTBC Credit Lines. As of the Effective Date, the Subsidiary had the following total outstanding borrowings under the Prior CTBC Credit Lines:
–Term loans denominated in NTD and remeasured into U.S. dollars of $25.1 million, the interest rate for which was 0.75% per annum;
–Term loans denominated in NTD and remeasured into U.S. dollars of $36.0 million, the interest rate for which was 0.45% per annum; and
–Aggregate outstanding borrowings under a revolving line of credit of $15.5 million. The interest rate for $6.5 million of such borrowings was 0.97% per annum and for $9.0 million of such borrowings was 1.03% per annum.
After giving effect to the New Borrowings and the Outstanding Borrowings, the amount available for future borrowing under the New CTBC Credit Lines is NTD546.4 million ($19.6 million U.S. dollar equivalent) for the term loan facility and $64.4 million for the line of credit facility.
The foregoing descriptions of the New CTBC Credit Lines do not purport to be complete and are qualified in their entirely by reference to the full and complete terms of such documents, copies of which are filed hereby as Exhibit 10.1, Exhibit 10.2, and Exhibit 10.3, and are incorporated herein by reference.
