Flex Ltd. (NASDAQ: FLEX) secures $1.45B term loan facility
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
Flex Ltd. entered into a new senior term loan Credit Facility totaling $1.45 billion with a syndicate of lenders, with Citibank, N.A. as administrative agent. The facility was fully funded on May 29, 2026 and matures on November 29, 2027.
Borrowings bear floating interest based on either Term SOFR or a Base Rate, in each case plus a margin tied to Flex’s senior long-term unsecured debt ratings. Key financial covenants include maintaining a Debt/EBITDA Ratio not above 4.00 to 1.00 and an Interest Coverage Ratio of at least 3.00 to 1.00 each quarter-end. Proceeds are for general corporate purposes, including refinancing an Existing 364-Day Facility, which was fully repaid and terminated when this new agreement became effective.
Positive
- None.
Negative
- None.
Insights
Flex replaces short-term funding with a larger, covenant-based term loan.
Flex Ltd. secured a $1.45 billion senior term loan maturing in 2027, providing committed medium-term financing. Interest is floating, tied to Term SOFR or a Base Rate plus a margin linked to the company’s unsecured debt ratings.
The agreement introduces leverage and interest coverage covenants, requiring a Debt/EBITDA Ratio at or below 4.00 and Interest Coverage at or above 3.00. Proceeds refinance the Existing 364-Day Facility, part of which funded the Electrical Power Products, Inc. acquisition, and support general corporate uses.
The facility’s covenants and customary default provisions mean continued access depends on Flex maintaining these ratios and complying with limits on additional debt, liens, asset sales, and mergers. The refinancing also removes the prior 364-day facility, consolidating term funding under this new structure.
8-K Event Classification
3 items: 1.01, 2.03, 9.01
3 items
Item 1.01
Entry into a Material Definitive Agreement
Business
The company signed a significant contract such as a merger agreement, credit facility, or major partnership.
Item 2.03
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement
Financial
The company incurred a new significant debt or off-balance-sheet obligation.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Credit Facility size: $1.45 billion
Maturity date: November 29, 2027
Debt/EBITDA covenant: 4.00 to 1.00
+2 more
5 metrics
Credit Facility size
$1.45 billion
Aggregate amount of senior term loan Credit Facility
Maturity date
November 29, 2027
Credit Facility maturity
Debt/EBITDA covenant
4.00 to 1.00
Maximum Debt/EBITDA Ratio at each fiscal quarter-end
Interest Coverage covenant
3.00 to 1.00
Minimum Interest Coverage Ratio at each fiscal quarter-end
Closing Date
May 29, 2026
Date Credit Agreement became effective and was fully funded
Key Terms
Credit Agreement, Term SOFR, Base Rate, Debt/EBITDA Ratio, +2 more
6 terms
Credit Agreement financial
"entered into a Credit Agreement (the “Credit Agreement”), by and among the Company"
A credit agreement is a written loan contract between a borrower and a bank or other lender that lays out how much money can be borrowed, the interest rate, repayment schedule, fees, and the rules the borrower must follow. For investors, it matters because those terms affect a company’s cash costs, borrowing flexibility and risk of default — similar to how a mortgage’s rules determine a homeowner’s monthly budget and freedom to make changes.
Term SOFR financial
"either (a) the Term SOFR (as defined in the Credit Agreement) plus an applicable margin"
Term SOFR is a benchmark interest rate that reflects the cost of borrowing money over a specific period, based on actual transactions in the financial markets. It is used by lenders and borrowers to set the interest rates on loans and financial contracts, helping to ensure rates are fair and transparent. For investors, understanding term SOFR helps gauge borrowing costs and the overall direction of interest rates in the economy.
Base Rate financial
"or (b) the Base Rate (as defined in the Credit Agreement) plus an applicable margin"
The base rate is the primary interest rate set by a central authority or used as a benchmark for pricing loans, savings and other financial products. Think of it as the anchor in a floating system: when the base rate moves, borrowing costs, corporate financing and consumer spending tend to shift too, which can change company profits and investor returns across the market.
Debt/EBITDA Ratio financial
"requires the maintenance of (i) a Debt/EBITDA Ratio (as defined in the Credit Agreement) not to exceed 4.00 to 1.00"
The debt/EBITDA ratio measures a company’s total interest-bearing debt divided by its EBITDA, a common proxy for the cash a business generates from operations before interest, taxes and non-cash accounting charges. It tells investors roughly how many years’ worth of operating earnings would be needed to pay off the debt; a lower ratio implies easier debt management and lower financial risk, while a higher ratio suggests tighter cash flow and greater default or refinancing risk.
Interest Coverage Ratio financial
"and (ii) an Interest Coverage Ratio (as defined in the Credit Agreement) not to be less than 3.00 to 1.00"
A measure of how easily a company can pay the interest on its debt, calculated by comparing the earnings it generates from operations to the interest it owes. It matters to investors because a higher ratio means the company can comfortably meet interest payments — like having several paychecks set aside to cover your rent — while a low ratio signals greater risk of missed payments or financial strain.
events of default financial
"The Credit Agreement also includes various, customary events of default."
Events of default are specific breaches or failures listed in a loan, bond, or credit agreement that give lenders the right to act, such as demanding immediate repayment, raising interest rates, or taking secured assets. They matter to investors because triggering one is like setting off a financial alarm: it raises the chance of foreclosure, restructuring, or bankruptcy and can sharply reduce the value of a company’s stock or bonds and increase borrowing costs.
FAQ
What new credit facility did FLEX enter into on May 29, 2026?
Flex Ltd. entered into a senior term loan Credit Facility totaling $1.45 billion. The facility was fully funded on May 29, 2026 and provides committed financing maturing in November 2027 with floating interest based on Term SOFR or a Base Rate plus a margin.
When does Flex Ltd.’s new $1.45 billion term loan mature?
The new $1.45 billion senior term loan for Flex Ltd. (FLEX) matures on November 29, 2027. This gives the company medium-term financing visibility beyond its prior 364-day facility, subject to compliance with leverage, coverage, and other customary covenants.
How is interest calculated under Flex Ltd.’s new Credit Agreement?
Interest on the new Credit Facility is based on either Term SOFR plus an applicable margin or a Base Rate plus an applicable margin, at Flex’s option. The margin level is determined by the company’s senior long-term unsecured debt ratings under the agreement.
What financial covenants apply to FLEX’s new $1.45 billion loan?
The Credit Agreement requires a Debt/EBITDA Ratio not exceeding 4.00 to 1.00 and an Interest Coverage Ratio of at least 3.00 to 1.00 at each fiscal quarter-end. These covenant levels must be maintained to avoid default and preserve borrowing access.
How will Flex Ltd. use the proceeds of the new Credit Facility?
Proceeds are designated for general corporate purposes, including refinancing the Existing 364-Day Facility. That prior facility had funded, in part, Flex’s acquisition of Electrical Power Products, Inc., and was fully repaid and terminated when the new Credit Agreement became effective.
Are Flex Ltd.’s subsidiaries guaranteeing the new Credit Facility?
Currently, no subsidiaries guarantee Flex Ltd.’s obligations under the Credit Agreement. However, the company may later cause any subsidiary to become a guarantor upon prior written notice to the administrative agent, providing potential additional credit support if desired.