- Current report filing (8-K)
November 24 2008 - 4:35PM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
October 27, 2008
Date of Report (Date of earliest event reported)
SANMINA-SCI CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
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000-21272
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77-0228183
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(I.R.S. Employer Identification
No.)
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2700 North First Street
San Jose, California 95134
(Address of principal executive offices, including zip code)
(408) 964-3500
(Registrants telephone number, including area code)
Check the appropriate box
below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see
General Instruction A.2. below):
o
Written communications pursuant to Rule 425
under the Securities Act (17 CFR 230.425)
o
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
o
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Item
1.01 Entry into a Material Definitive Agreement.
Loan
Agreement
On November 19,
2008, Sanmina-SCI Corporation (the Company) entered into a Loan, Guaranty and
Security Agreement (the Loan Agreement), among the Company and certain of its
subsidiaries as borrowers, Sanmina-SCI Systems (Canada) Inc. and SCI Brockville
Corp., as Designated Canadian Guarantors, the financial institutions party
thereto from time to time as lenders and Bank of America, N.A., as agent for
such lenders.
The Loan Agreement
provides for a $135.0 million secured asset-based revolving credit facility
with a $50.0 million letter of credit
sublimit. The facility may be increased
by up to $200.0 million upon obtaining additional commitments from the lenders
then party to the Loan Agreement or new lenders. The Loan Agreement expires on the earlier of (i) the
date that is 90 days prior to the maturity date of the Companys Senior
Floating Rate Notes due 2010 or the Companys 6 ¾% Senior Subordinated Notes
due 2013, in each case if such notes are not repaid, redeemed, defeased,
refinanced or reserved for under the borrowing base under the Loan Agreement
prior to such date and (ii) November 19, 2013 (the Maturity Date).
Loans may be advanced
under the Loan Agreement based on a borrowing base derived from specified
percentages of the value of eligible accounts and eligible inventory. If at any
time the aggregate principal amount of the loans outstanding plus the face
amount of undrawn letters of credit under the Loan Agreement exceed the
borrowing base then in effect, the Company must make a payment or post cash
collateral (in the case of letters of credit) in an amount sufficient to
eliminate such excess. There are currently no loans and approximately $23.7
million in letters of credit outstanding under the Loan Agreement.
Loans under the Loan
Agreement bear interest, at the Companys option, at a rate equal to the London
interbank offered rate (LIBOR) or a base rate equal to Bank of America, N.A.s
announced prime rate, in each case plus a spread. A commitment fee accrues on
any unused portion of the commitments under the Loan Agreement at a rate per
annum based on usage. Principal, together with accrued and unpaid interest, is
due on the Maturity Date.
The Companys obligations
under the Loan Agreement are secured by (1) all U.S. and Canadian accounts
receivable, with automatic lien releases occurring at time of sale of each
accounts receivable transaction pursuant to the Contribution Agreement (as
defined below); (2) all U.S. and Canadian inventory and associated
obligations and documents; (3) all U.S. and Canadian deposit accounts,
except accounts used for collections for certain transactions; and (4) a
65% pledge of the capital stock of our first-tier foreign subsidiaries.
The Loan Agreement
contains customary affirmative covenants, including covenants regarding the
payment of taxes and other obligations, maintenance of insurance, reporting
requirements and compliance with applicable laws and regulations.
Further, the Loan Agreement contains customary negative covenants limiting the
ability of the Company under certain circumstances, among other things, to use
the facility to make investments, acquisitions and certain restricted payments,
and to sell assets. Upon an event of default, the lenders may declare all
outstanding principal and accrued but unpaid interest under the Loan Agreement
immediately due and payable. Events of default under the Loan Agreement include
payment defaults, cross defaults with certain other indebtedness, breaches of
covenants or representations and warranties, change in control of the Company
and bankruptcy events.
Credit
Agreement
On November 24, 2008, Sanmina SPV LLC, a special purpose entity
and wholly-owned subsidiary of the Company (Sanmina SPV), entered into a
Credit and Security Agreement (the Credit Agreement), with the lenders party
thereto and Deutsche Bank AG, New York Branch, as administrative agent and
collateral agent.
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The Credit Agreement forms the U.S. component of the Companys global
receivables program by which the Company may sell accounts receivables from its
EMS customers. The maximum face amount
of accounts receivable that may be outstanding at any time under the global
receivables program is $250 million.
The Credit Agreement has a term of up to two years from the date of the
Credit Agreement (the Termination Date) and permits Sanmina SPV to obtain
revolving loans from the lenders from time to time secured by accounts
receivable contributed to Sanmina SPV by the Company (the Commitments).
Any amounts outstanding on the Termination Date must be repaid within 90
days. The Credit Agreement is subject,
among other things, to the terms of a borrowing base equal to the lesser of the
commitment for the applicable tranche of loans and 95% of the uncollected value
of eligible receivables for that tranche.
If at any time the aggregate amounts outstanding under a particular
tranche of the Credit Agreement exceed the borrowing base then in effect for that
tranche (a Borrowing Base Deficit), Sanmina SPV must prepay an amount
sufficient to eliminate such excess. The
Company has been appointed by Sanmina SPV to administer and service the
contributed accounts receivable on its behalf.
Loans under the Credit Agreement generally bear interest at a rate
equal to LIBOR plus a spread. Interest on the loans is payable quarterly in
arrears. The Credit Agreement provides for a commitment fee based on the
unused portion of the facility.
The Credit Agreement contains
customary representations and warranties, affirmative covenants, including
covenants regarding reporting requirements, compliance with applicable laws and
regulations, the payment of taxes and other obligations and maintenance of
trade credit insurance. Further, the
Credit Agreement contains customary negative covenants limiting the ability of
Sanmina SPV, among other things, to enter into certain agreements, incur debt,
grant liens, make investments, issue equity or dissolve or liquidate.
The Company has
agreed to indemnify Sanmina SPV and Deutsche Bank AG, New York Branch, as
Agent under the Credit Agreement, for damages resulting from certain
claims, including breach of representations and warranties made by
the Company or any of its officers concerning the validity or enforceability of
a transferred receivable or compliance with the criteria for an eligible
receivable, failure by the Company to comply with terms,
provisions or covenants, failure to vest or transfer legal and equitable
title to assigned receivables free and clear of liens, misdirection of
collections, or payment shortfalls arising from commercial disputes, offsets,
claims and defenses. There is no indemnification against the risk of
non-collection of receivables caused by the insolvency or bankruptcy of the
customer generating the receivables
The termination events
under the Credit Agreement include payment defaults, breaches of covenants
(subject to grace periods in certain instances) or representations and
warranties, cross defaults with certain other indebtedness of the Company,
certain bankruptcy events with respect to the Company or Sanmina SPV, a change
in control of the Company, the occurrence of a material adverse effect in the
business, assets, property, operations or conditions of the Company or Sanmina
SPV and the existence of a Borrowing Base Deficit for more than three business
days. In such a case, the
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commitments under the
Credit Agreement may be terminated and the amounts owed thereunder declared
immediately due and payable, and the agent and the lenders will be entitled to
exercise the other rights and remedies set forth in the Credit Agreement.
Item 1.02 Termination of a Material Definitive
Agreement.
On November 19,
2008, in connection with entering into the Loan Agreement, the Company
terminated its Amended and Restated Credit and Guaranty Agreement, dated as of December 16,
2005 (the Revolving Credit Agreement), among the Company, certain of its
subsidiaries, as guarantors, the lenders party thereto from time to time, Bank
of America, N.A., as Initial Issuing Bank, Citicorp USA, Inc., as
Syndication Agent, The Bank of Nova Scotia, Deutsche Bank Trust Company
Americas and KeyBank National Association, as Co-Documentation Agents, Banc of
America Securities LLC and Citigroup Global Markets Inc., as Joint Book
Managers and Joint Lead Arrangers, Bank of America, N.A., as Administrative
Agent, and Citibank, N.A., as Collateral Agent.
There were no loans outstanding and approximately $23.7 million in face
amount of letters of credit issued under the Revolving Credit Agreement at the
time of termination.
Item
2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth
in Item 1.01 hereof is incorporated by reference into this Item 2.03.
Item 5.02 Departure of Directors or Certain
Officers; Election of Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers
On October 27, 2008, the Compensation Committee
of the Board of Directors of the Company approved a bonus target of 100% of
base salary for Jure Sola, Chief Executive Officer of the Company, under the Sanmina-SCI
FY2008 Corporate Annual G&A Short-Term Incentive Plan (the Incentive Plan)
previously adopted by the Committee. The fiscal 2008 bonus targets for the
Companys other executive officers set by the Committee in November 2007
did not change and are as follows (targets expressed as a percentage of base
salary): Hari Pillai (President and
Chief Operating Officer): 90%; David L. White (Executive Vice President and
Chief Financial Officer): 90%; Dennis Young (Executive President of Worldwide
Sales and Marketing): 80%; and Michael R. Tyler (Executive Vice President and
General Counsel): 80%.
Actual fiscal 2008 bonuses payable under the
Incentive Plan are dependent upon the Companys and individual/divisional
performance and will be reported in the proxy statement for the Companys 2009
Annual Meeting of Stockholders expected to be filed in December 2008.
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SIGNATURE
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.
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SANMINA-SCI
CORPORATION
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Date: November 24,
2008
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By:
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/s/ David L. White
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David L. White
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Executive Vice
President and Chief Financial
Officer
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