Zebra Technologies closes on $3.25 billion secured credit facility

By Mary-Katherine Stinson

Lexington, Ky., May 26 – Zebra Technologies Corp. and its subsidiary Zebra Diamond Holdings Ltd. completed a comprehensive debt restructuring, closing on a $3.25 billion senior secured credit facility on May 25, according to a news release and an 8-K filing with the Securities and Exchange Commission.

The amended facility consists of a $1.5 billion revolving credit facility and $1.75 billion tranche A term loan and extends the maturity date to May 25, 2027 with a lower pricing tier at SOFR plus 100 basis points that escalates if the total net leverage ratio is greater than 1.5x.

The initial interest rate is SOFR plus 125 bps, with the range set at the lower tier of 100 bps to 175 bps at the top.

The initial commitment fee for the revolving credit facility is 22.5 bps per year which will be adjusted on a quarterly basis to 17.5, 22.5, 25 or 30 bps depending on the company’s total net leverage ratio.

The tranche A term loan consists of $483 million in the tranche A-1 available to Zebra Diamond Holdings and $1.267 billion in tranche A-2 available to Zebra Technology.

The company also may at any time request incremental term and/or revolving commitments up to $750 million or an unlimited additional amount so long as it could be incurred without causing the consolidated total secured net leverage ratio on a pro forma basis to exceed 3x or 4.75x if used to finance an acquisition.

At closing, $50 million was drawn on the revolver.

There is no premium or penalty for repaying and re-borrowing loans under the facility other than customary breakage costs with respect to certain loans.

The credit facility is secured by each of the companies’ existing and future wholly owned domestic restricted subsidiaries, a security interest in substantially all of the company’s and the guarantors’ U.S. assets, a pledge of all of the capital stock of substantially all of wholly owned domestic restricted subsidiaries and 65% of the capital stock of the company’s first-tier material foreign restricted subsidiaries.

As a result of the refinancing, the company’s previous $875 million term loan and $1 billion revolving facility were retired. They would have matured Aug. 9, 2024.

Proceeds from the new term loan are expected to fund the company’s pending $875 million acquisition of Matrox Imaging.

JPMorgan Chase Bank, NA was the revolving facility administrative agent, tranche A term loan administrative agent and collateral agent.

J.P. Morgan joins Wells Fargo as co-left lead arrangers on the structuring and syndication of the facility.

Zebra engaged Proskauer as counsel for the transaction.

Zebra is a Lincolnshire, Ill.-based provider of hardware, software, services and solutions that digitize and automate workflows.

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