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| Item 1.01. | 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) a general agreement for omnibus credit lines dated July 20, 2021 with CTBC Bank Co., Ltd. (“CTBC Bank”) and (ii) various individual credit arrangements under such general agreement which provided for aggregate total borrowings of up to $105.0 million (the “Prior CTBC Credit Lines”).
On September 28, 2023 (the “Effective Date”), the Subsidiary entered into a new 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, thereunder pursuant to various individual credit arrangements under such general agreement that included the previous issued long and medium term loan facility of NTD 1,550.0 million in 2021 and 2020 (the “Long and Medium Loan Facility” ), and each of (i) a short-term loan and guarantee line providing credit of up to NTD1,250.0 million and NTD100.0 million, respectively (the “NTD Short Term Loan/Guarantee Line”), (ii) a short-term loan providing a line of credit of up to $40.0 million (the “USD Short Term Loan Line”), and (iii) an export/import o/a loan line providing a line of credit of up to $105.0 million for exports and $50.0 million for imports (the “Export/Import Line,” and, together with the NTD Short Term Loan/Guarantee Line and the USD Short Term Loan Line, the “New CTBC Credit Lines”). Aggregate borrowings under all the New CTBC Credit Lines together is subject to a cap of $105.0 million.
Interest rates under each of the individual New CTBC Credit Lines are to be established according to individual credit arrangements, which interest rates shall be subject to adjustment depending on the satisfaction of certain conditions. Each of the NTD Short Term Loan/Guarantee Line and USD Short Term Loan Line are secured by certain of the Subsidiary’s assets, including certain property, land, and plant. The tenor for each of the individual New CTBC Credit Lines is one year. For the Long and Medium Loan Facility, the Subsidiary is subject to various financial covenants, 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 various of 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 in connection with financing of eligible accounts receivable and accounts payable (vendor invoices) and to finance additional improvements to the Company’s Bade Manufacturing Facility located in Taiwan.
Amounts outstanding under the Prior CTBC Credit Lines on the Effective Date were assumed by the New CTBC Credit Lines. As of the Effective Date, the Subsidiary had no borrowings under the NTD Short Term Loan/Guarantee Line, USD Short Term Loan Line, or Export/Import Line. In addition, as of the Effective Date, the Subsidiary had borrowings under the Long and Medium Loan Facility in NTD and remeasured into U.S. dollars of $40.1 million, the interest rate for which ranged from 1.2% to 1.4%.
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.
