FLEX LTD. 8-K

What Happened

• Flex Ltd. announced (Item 1.01) that on May 29, 2026 it entered into and fully funded a Credit Agreement providing a $1.45 billion senior term loan credit facility. Citibank, N.A. is the administrative agent. The facility matures on November 29, 2027 and replaces the Company's prior 364‑day facility.

Key Details

• Amount: $1.45 billion senior term loan, funded on the May 29, 2026 closing date.
• Maturity: November 29, 2027.
• Interest: floating rate at borrower’s option — Term SOFR plus a margin or Base Rate plus a margin; margin tied to Flex’s long‑term unsecured debt ratings.
• Covenants and restrictions include customary limits on new indebtedness, liens, asset disposals, mergers, material business changes, and certain accounting changes; financial covenants require Debt/EBITDA ≤ 4.00x and Interest Coverage ≥ 3.00x (each measured quarterly).
• Purpose: general corporate purposes, including refinancing the prior 364‑day facility (which was paid in full and terminated) and related to financing the previously disclosed acquisition of Electrical Power Products, Inc.
• Guarantees: obligations are not currently guaranteed by subsidiaries, though Flex may add subsidiary guarantors later with notice.

Why It Matters

• The new term loan provides Flex with committed liquidity ($1.45B) through November 2027 and replaces its short‑term facility, reducing rollover risk in the near term.
• The financial covenants (Debt/EBITDA and Interest Coverage) set measurable limits that could constrain leverage or require action if results weaken; these are key metrics investors should monitor.
• Interest margins tied to credit ratings mean borrowing costs may change if Flex’s ratings move, affecting interest expense.