Item 1.01. | Entry into a Material Definitive Agreement. |
Background
As previously announced, Teledyne Technologies Incorporated (“Teledyne”) entered into an Agreement and Plan of Merger dated January 4, 2021 (the “Merger Agreement”), with FLIR Systems, Inc., a Delaware corporation (“FLIR”), Firework Merger Sub I, Inc., a Delaware corporation and wholly owned subsidiary of Teledyne (“Merger Sub I”), Firework Merger Sub II, LLC, a Delaware limited liability company and wholly owned subsidiary of Teledyne (“Merger Sub II”), and Teledyne that provides for a two-step merger (the “Mergers”) that will result in FLIR becoming a wholly owned subsidiary of Teledyne. In connection with the Merger Agreement, Teledyne entered into a commitment letter dated January 4, 2021 (as supplemented by that certain Joinder Letter to Bridge Facility dated as of January 19, 2021 (the “Joinder Letter”), and as further amended, supplemented or otherwise modified, the “Bridge Facility Commitment Letter”) with BofA Securities, Inc., Bank of America, N.A. (“Initial Bridge Lender”) and the other lenders party to that Joinder Letter pursuant to which the Initial Bridge Lender and such other lenders committed to provide Teledyne with a $4.5 billion senior 364-day bridge term loan facility (the “Bridge Facility”).
2021 Term Loan Credit Agreement
On March 4, 2021, Teledyne, as borrower, entered into a Term Loan Credit Agreement with the several banks and other financial institutions from time to time parties thereto as lenders and Bank of America, N.A., as administrative agent (the “2021 Term Loan Credit Agreement”). Pursuant to the 2021 Term Loan Credit Agreement, the lenders thereunder have committed to make unsecured term loans of up to $1,000,000,000. The loans will finance in part the cash portion of the consideration for the Mergers and other fees and expenses in connection with the Mergers. The credit facilities under the 2021 Term Loan Credit Agreement replace $1,000,000,000 of the commitments of the Initial Bridge Lender under the Bridge Facility Commitment Letter.
Loans made under the 2021 Term Loan Credit Agreement mature on March 4, 2026. Interest accrues on the loans made under the 2021 Term Loan Credit Agreement at variable rates which are, at the borrower’s option, tied to either a eurocurrency rate (as defined in the 2021 Term Loan Credit Agreement), determined with reference to the London Interbank Offered Rate (LIBOR) plus an applicable margin, or a base rate (as defined in the 2021 Term Loan Credit Agreement) determined with reference to the highest of the federal funds rate plus 50 bps, Bank of America, N.A.’s prime rate and the eurocurrency rate plus 100 bps, plus an applicable margin. Eurocurrency rate-based loans under the 2021 Term Loan Credit Agreement have interest periods of one, two, three or six months, as selected by the borrower. The applicable margin used in determining the interest on both eurocurrency rate loans and base rate loans are subject to change based on Teledyne’s debt rating from time to time. Within 30 days after the closing of the Mergers, Teledyne FLIR, LLC, which shall be the surviving entity of the merger of FLIR into subsidiaries of Teledyne as part of the Mergers (“Teledyne FLIR”), will become a subsidiary guarantor of Teledyne’s obligations under the 2021 Term Loan Credit Agreement.
The 2021 Term Loan Credit Agreement contains customary representations, covenants and events of default that are substantially similar to the representations, covenants and events of default set forth in the Amended and Restated Credit Agreement (as defined and described below).
Amended and Restated Credit Agreement
On March 4, 2021, Teledyne, as borrower and guarantor, and certain of its foreign subsidiaries, as designated borrowers, entered into an Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”), which amends and restates in its entirety Teledyne’s Amended and Restated Credit Agreement dated as of March 1, 2013, as amended by that certain First Amendment to Amended and Restated Credit Agreement dated as of December 4, 2015, that certain Second Amendment to Amended and Restated Credit Agreement dated as of January 17, 2017, that certain Third Amendment to Amended and Restated Credit Agreement dated as of March 17, 2017, that certain Fourth Amendment to the Amended and Restated Credit Agreement, dated as of March 15, 2019, that certain Fifth Amendment to Amended and Restated Credit Agreement dated as of October 30, 2019 and that certain Sixth Amendment to Amended and Restated Credit Agreement dated as of January 19, 2021 (the “Prior Credit Agreement”).
Pursuant to the Amended and Restated Credit Agreement, (i) the lenders thereunder have committed to make revolving loans, including revolving loans to repay swing line loans made thereunder by the Swing Line Lender (as defined therein), and/or to reimburse draws under letters of credit issued thereunder by the L/C Issuer (as defined therein) in an aggregate amount of up to (a) prior to the consummation of the Mergers on the Full Availability