Credit Agreement
On September 27, 2023, Seagate Technology Holdings plc and Seagate HDD entered into an amendment to its Credit Agreement (the “Tenth Amendment”). Under the Tenth Amendment, the maximum permitted total net leverage ratio is 6.75 to 1.00 for the fiscal quarter ending September 29, 2023. For the fiscal quarters ending December 29, 2023 and March 29, 2024, the total net leverage ratio covenant will not apply. For the fiscal quarters ending June 28, 2024 until the end of the covenant relief period, which terminates on June 27, 2025, the maximum permitted total net leverage ratio is 6.75 to 1.00, to the extent that the aggregate outstanding amount of revolving loans, swing line loans and the aggregate face amount of Letters of Credit exceeds 25% of the then outstanding revolving commitments in effect (“Testing Condition”) as of the last day of the fiscal quarter. The maximum permitted total leverage ratio for each fiscal quarter ending after June 27, 2025 is 4.00 to 1.00.
The minimum interest coverage ratio is 2.25 to 1.00 for the fiscal quarter ending September 29, 2023. For the fiscal quarters ending December 29, 2023 and March 29, 2024, the minimum interest coverage ratio covenant will not apply. For the fiscal quarters ending June 28, 2024 until June 27, 2025, the minimum interest coverage ratio is 2.25 to 1.00, to the extent that the Testing Condition is satisfied as of the last day of the fiscal quarter. The minimum interest coverage ratio is 3.25 to 1.00 for the fiscal quarter ending after June 27, 2025.
The Tenth Amendment also removed the minimum liquidity of $700 million. As of September 29, 2023, the Credit Agreement includes two financial covenants: (1) interest coverage ratio and (2) total net leverage ratio. The Company was in compliance with the covenants as of September 29, 2023.