Western Digital 2012 Annual Report Download - page 70

WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Borrowings under the Credit Facility bear interest at a rate equal to, at the option of the applicable Borrowers,
either (a) a LIBOR rate determined by reference to the British Bankers Association LIBOR Rate for the interest period
relevant to such borrowing, subject to certain exceptions (the “Eurodollar Rate”) or (b) a base rate determined by
reference to the higher of (i) the federal funds rate plus 0.50%, (ii) the prime rate as announced by Bank of America,
N.A. and (iii) the Eurodollar Rate plus 1.00% (the “Base Rate”), in each case plus an applicable margin. The appli-
cable margin for borrowings under the Credit Facility ranges from 1.50% to 2.50% with respect to borrowings at the
Eurodollar Rate and 0.50% to 1.50% with respect to borrowings at the Base Rate. The applicable margins for
borrowings under the Credit Facility are determined based upon a leverage ratio of the Company and its subsidiaries
calculated on a consolidated basis. The interest rate at June 29, 2012 was 2.25%.
In addition to paying interest on outstanding principal under the Credit Facility, the applicable Borrower is
required to pay a facility fee to the lenders under the revolving credit facility in respect of the aggregate, available
revolving commitments thereunder. The facility fee rate ranges from 0.25% to 0.50% per annum and is determined
based upon a leverage ratio of the Company and its subsidiaries calculated on a consolidated basis. The applicable
Borrower is also required to pay letter of credit fees (a) to the revolving credit facility lenders, on the aggregate face
amount of all outstanding letters of credit equal to an applicable margin in effect with respect to the Eurodollar Rate
borrowings and (b) to the letter of credit issuer, computed at a rate equal to 0.125% per annum on the face amount of
the letter of credit, plus such letter of credit issuer’s customary documentary and processing fees and charges.
The term loans and the revolving credit loans may be prepaid in whole or in part at any time without premium
or penalty, subject to certain conditions. The Company is required to make principal payments on the term loan
facility totaling $230 million a year for fiscal 2013 through fiscal 2016, and the remaining $1.3 billion balance
(subject to adjustment to reflect prepayments or an increase to its term loan facility) in fiscal 2017, with the term loan
facility balance due and payable in full on March 8, 2017. The revolving credit facility was repaid in the fourth fiscal
quarter of 2012.
The Credit Facility requires the Company to comply with a leverage ratio and an interest coverage ratio calcu-
lated on a consolidated basis for the Company and its subsidiaries. In addition, the Credit Facility contains customary
covenants, including covenants that limit or restrict, subject to certain exceptions, the Company’s and its subsidiaries’
ability to incur liens, incur indebtedness, make certain restricted payments, merge, consolidate or dispose of sub-
stantially all of its assets, and enter into certain speculative hedging arrangements and make any material change in
the nature of its business. Upon the occurrence of an event of default under the Credit Facility, the Administrative
Agent at the request, or with the consent, of the Required Lenders (as defined in the Credit Facility) may cease mak-
ing loans, terminate the Credit Facility and declare all amounts outstanding to be immediately due and payable,
require the cash collateralization of letters of credit and/or exercise all other rights and remedies available to it, the
Lenders and the letter of credit issuer. The Credit Facility specifies a number of events of default (some of which are
subject to applicable grace or cure periods), including, among other things, non-payment defaults, covenant defaults,
cross-defaults to other material indebtedness, bankruptcy and insolvency defaults, material judgment defaults and a
change of control default. As of June 29, 2012, the Company was in compliance with all covenants.
The obligations of the Borrowers under the Credit Facility are guaranteed by the Company and the Company’s
material domestic subsidiaries, and the obligations of WDI under the Credit Facility are also guaranteed by WDT.
The Company was required to pay a commitment fee at the rate of 0.35%, per annum of the aggregate unfunded
amount committed to be borrowed under the Credit Facility from the date of commitment on March 7, 2011 through
the Closing Date. From the beginning of fiscal 2012 through the Closing Date, the Company incurred debt commit-
ment fees of $7 million, which are included within interest and other expense in the consolidated statements of
income.
On the Closing Date, the Company repaid the entire outstanding principal amount of $231 million on its pre-
viously existing term loan facility originally scheduled to mature on February 11, 2013, plus accrued and unpaid
interest, as well as $585 million of debt assumed in the Acquisition.
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