DELPHI 2014 Annual Report Download - page 72

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Acquisition of Motorized Vehicles Division of FCI
On October 26, 2012, Delphi completed the acquisition of MVL for €765 million, or approximately $1 billion based on
exchange rates as of the date of the acquisition. MVL is a leading global manufacturer of automotive connection systems with a
focus on high-value, leading technology applications.
Upon completing the acquisition, Delphi incurred related transaction expenses totaling approximately $13 million. The
cash payments required to close the transaction were funded using existing cash on hand, including $363 million drawn in
October 2012 under the Credit Agreement.
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 (the "Issuer") entered into a credit agreement with JPMorgan Chase Bank, N.A., as lead
arranger and administrative agent (the “Original Credit Agreement”), which 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. The
March 31, 2013 amendments 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 conjunction with the March 2013 amendment. In
conjunction with an unsecured note issuance in March 2014 (as more fully described below), Delphi repaid a portion of its
indebtedness on the Tranche A Term Loan, which resulted in the recognition of a loss on debt extinguishment related to this
repayment of approximately $1 million during the year ended December 31, 2014.
Unamortized debt issuance costs associated with the Tranche A Term Loan and Revolving Credit Facility of $19 million
are being amortized over the term of the Credit Agreement, as extended pursuant to the March 1, 2013 amendment. At
December 31, 2014, the Revolving Credit Facility was undrawn and Delphi had approximately $12 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, 2014 to manage intra-month working capital needs was $85 million. Letters of credit issued under the Credit
Agreement reduce availability under the Revolving Credit Facility.
Loans under the Credit Agreement bear interest, at Delphi Corporation’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 Applicable Rates under the Credit Agreement on the specified dates are set forth below:
December 31, 2014 December 31, 2013
LIBOR plus ABR plus LIBOR plus ABR plus
Revolving Credit Facility .................................................... 1.00% 0.25% 1.25% 0.25%
Tranche A Term Loan.......................................................... 1.00% 0.25% 1.25% 0.25%