DELPHI 2013 Annual Report Download - page 71

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The acquisition was accounted for as a business combination, with the purchase price allocated on a preliminary basis
using information available, in the fourth quarter of 2012. The purchase price and related allocation were finalized in the three
months ended March 31, 2013. The operating results of MVL are reported within the Electrical/Electronic Architecture
segment from the date of acquisition.
Subsequent to announcing the transaction, in June 2012, the Company entered into €250 million of option contracts to
hedge a portion of the currency risk associated with the cash payment for the planned acquisition of MVL at a cost of $9
million. The options were unable to qualify as hedges for accounting purposes, and therefore, changes in the fair value of the
options were recognized in other income (expense), net. In the year ended December 31, 2012, the change in fair value resulted
in a $3 million loss. Subsequently, and in conjunction with the closing of the acquisition, the options were sold in October 2012
for $6 million.
Credit Agreement
In March 2011, in conjunction with the redemption of membership interests from Class A and Class C membership
interest holders, Delphi Corporation entered into a credit agreement with JPMorgan Chase Bank, N.A., as lead arranger and
administrative agent (the “Original Credit Agreement”). The Original Credit Agreement provided for $3.0 billion in senior
secured credit facilities consisting of term loans (as subsequently amended from time to time, the “Tranche A Term Loan” and
the “Tranche B Term Loan,” respectively) and a revolving credit facility (as subsequently amended from time to time, the
“Revolving Credit Facility”). The Original Credit Agreement was amended and restated on each of May 17, 2011 (the “May
2011 Credit Agreement”), September 14, 2012 (the “2012 Credit Agreement”) and March 1, 2013. (The Original Credit
Agreement and each amendment and restatement of the Original Credit Agreement are individually and collectively referred to
herein as the “Credit Agreement”). The May 2011 Credit Agreement, which was entered into simultaneously with the issuance
of senior unsecured notes in the amount of $1 billion (as more fully described below), reduced the total size of the senior
secured credit facilities to $2.4 billion. Under the 2012 Credit Agreement, the Company increased the Revolving Credit Facility
to $1.3 billion and the Tranche A Term Loan to $574 million and used the incremental proceeds to pay a portion of the cost of
acquiring MVL. On March 1, 2013, following the unsecured note issuance in February 2013 (as more fully described below),
the Tranche B Term Loan was fully repaid, the Tranche A Term Loan was increased to $575 million, the Revolving Credit
Facility was increased to $1.5 billion, and the terms of the Tranche A Term Loan and the Revolving Credit Facility were
extended to March 1, 2018. These resulted in the recognition of a loss on debt extinguishment of $39 million during the year
ended December 31, 2013. Approximately $14 million in issuance costs were paid in connection with the March 2013
amendment. Unamortized debt issuance costs associated with the Tranche A Term Loan and Revolving Credit Facility of $27
million are being amortized over the term of the Credit Agreement, as extended pursuant to the March 1, 2013 amendment. At
December 31, 2013, the Revolving Credit Facility was undrawn and Delphi had approximately $10 million in letters of credit
issued under the Credit Agreement. The maximum amount drawn under the Revolving Credit Facility during the year ended
December 31, 2013 to manage intra-month working capital needs was $285 million. Letters of credit issued under the Credit
Agreement reduce availability under the Revolving Credit Facility.
Loans under the Credit Agreement bear interest, at the Issuer’s option, at either (a) the Administrative Agent’s Alternate
Base Rate (“ABR” as defined in the Credit Agreement) or (b) the London Interbank Offered Rate (the “Adjusted LIBO Rate”
as defined in the Credit Agreement) (“LIBOR”) plus in either case a percentage per annum as set forth in the table below (the
“Applicable Rate”). The Tranche B Term Loan had a LIBOR floor of 1.00%. The Applicable Rates under the 2012 Credit
Agreement and current Credit Agreement are set forth below:
Credit Agreement (December 31, 2013) 2012 Credit Agreement (December 31, 2012)
LIBOR plus ABR plus LIBOR plus ABR plus
Revolving Credit Facility ....................... 1.25% 0.25% 2.00% 1.00%
Tranche A Term Loan............................. 1.25% 0.25% 2.00% 1.00%
Tranche B Term Loan............................. N/A N/A 2.50% 1.50%
The Applicable Rate under the Credit Agreement may increase or decrease from time to time based on changes in credit
ratings with the minimum interest level of 0.00% and a maximum level of 2.25%. Accordingly, the interest rate will fluctuate
during the term of the Credit Agreement based on changes in the ABR, LIBOR or future changes in our corporate credit ratings.
The Credit Agreement also requires that the Issuer pay certain commitment fees on the unused portion of the Revolving Credit
Facility and certain letter of credit issuance and fronting fees.
The interest rate period with respect to LIBOR interest rate options can be set at one-, two-, three-, or six-months as
selected by the Issuer in accordance with the terms of the Credit Agreement (or other period as may be agreed by the applicable
lenders), but payable no less than quarterly. The Issuer may elect to change the selected interest rate in accordance with the
provisions of the Credit Agreement. As of December 31, 2013, the Issuer selected the one-month LIBOR interest rate option, as