20-F: Celestica Amends Credit Agreement, Replacing LIBOR with Term SOFR

Celestica and Bank of America, N.A. amend their credit agreement to replace LIBOR with a Term SOFR based rate.

Summary

• Celestica and Bank of America, N.A., as Administrative Agent, have agreed to amend the existing credit agreement dated June 27, 2018.
• The amendment replaces LIBOR with a Term SOFR based rate as the new benchmark interest rate for USD borrowings.
• The amendment restates the body of the credit agreement and exhibits related to loan notices and prepayment notices.
• Existing Eurocurrency Rate Loans will continue to bear interest at the Eurocurrency Rate until the end of their current Interest Periods, after which they will convert to Term SOFR Loans.
• The amendment becomes effective at 5:00 p.m. on the fifth Business Day after posting, unless Required Lenders object.
• Celestica reaffirms its obligations and the validity of liens and security interests under the existing credit agreement.

Sentiment

Score: 7

Explanation: The document is a standard amendment to a credit agreement, indicating a stable financial relationship. The sentiment is neutral to positive.

Positives

• The transition from LIBOR to Term SOFR provides clarity and stability for future interest rate calculations.
• The reaffirmation of existing obligations and security interests ensures the continuity of the credit agreement.

Future Outlook

The document outlines the transition to a new interest rate benchmark, ensuring the credit agreement remains relevant and functional in the future.

Industry Context

The shift away from LIBOR is an industry-wide trend, and this amendment reflects Celestica's adaptation to new market standards for setting interest rates on credit facilities.

Comparison to Industry Standards

• The transition from LIBOR to Term SOFR is in line with global financial industry efforts to replace LIBOR with more robust and reliable benchmark rates.
• Many companies are amending their credit agreements to incorporate alternative benchmark rates such as Term SOFR.

Stakeholder Impact

• Lenders will need to adapt to the new Term SOFR based rate.
• Borrowers will have greater certainty regarding future interest rate calculations.

Next Steps

• The amendment will become effective five business days after posting, unless Required Lenders object.
• Eurocurrency Rate Loans will be converted to Term SOFR Loans upon maturity of their current Interest Periods.

Key Dates

Keywords

Credit Agreement, Amendment, Term SOFR, LIBOR, Bank of America, Celestica, Loan, Interest Rate, Financial Agreement