On Monday, Broadcom Inc. (NASDAQ:AVGO), a prominent player in the semiconductor industry, announced the termination of its existing credit agreement and the establishment of a new $7.5 billion unsecured revolving credit facility.
This strategic financial move is detailed in an 8-K filing with the Securities and Exchange Commission.
The original credit agreement, dated January 19, 2021, provided Broadcom with a $7.5 billion unsecured revolving credit facility that was scheduled to mature in 2026. The company reported no outstanding borrowings under this agreement immediately prior to its termination. The interest rates on the previous agreement were variable and depended on the company's credit ratings.
The new credit agreement, also with a limit of $7.5 billion, was entered into on the same day as the termination of the previous one. This facility is slated for a five-year term and will be available for general corporate purposes. Up to $500 million of this facility can be allocated for the issuance of multicurrency letters of credit, which will proportionately reduce the available revolving loans.
Broadcom has stated that there were no borrowings outstanding under the new Revolving Facility at the time of closing. The termination of the previous credit agreement and the initiation of the new one were executed as part of a broader strategic plan to optimize the company's capital structure.
The information for this article was obtained from a recent 8-K filing with the Securities and Exchange Commission.
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