Flex Ltd. secures new $2.75 billion revolving credit facility

Flex Ltd. (NASDAQ:FLEX), a prominent player in the Electronic Equipment industry with a market capitalization of $19.8 billion, has entered into a new $2.75 billion revolving credit facility, replacing its previous $2.5 billion agreement, according to a statement released in a recent SEC filing. According to InvestingPro data, the company maintains a "GOOD" overall financial health score, suggesting strong operational stability.

The new credit agreement, signed Tuesday, involves Bank of America, N.A. as the administrative agent, along with a group of lenders. The facility matures on July 15, 2030, and includes a $400 million sublimit for swing line loans and a $200 million sublimit for letters of credit. Flex Ltd. may also expand the facility by up to $500 million through additional commitments, subject to certain conditions.

The new arrangement replaces Flex’s prior $2.5 billion credit facility, which was set to mature in July 2027. The previous agreement was terminated upon execution of the new facility, except for obligations that expressly survive termination.

Borrowings under the new facility will bear interest at rates based on either a base rate or the Secured Overnight Financing Rate (SOFR), with margins determined by the company’s credit ratings. The applicable margin ranges from 0.00% to 0.750% per annum for base rate loans, and from 1.00% to 1.750% per annum for SOFR or alternative currency loans. Commitment fees on unused portions of the revolving facility range from 0.100% to 0.275% per annum, also based on credit ratings. Letter of credit usage fees range from 1.00% to 1.750% per annum, with an additional fronting fee of 0.125% per annum on undrawn and unexpired letters of credit.

The credit facility is unsecured and contains covenants that restrict Flex Ltd. and its subsidiaries from incurring certain types of debt, making specific acquisitions, or incurring liens, subject to exceptions and limitations. The company is also required to maintain certain leverage and interest coverage ratios during the term of the agreement. The obligations are not guaranteed by any subsidiary. With a current ratio of 1.3 and a debt-to-equity ratio of 0.86, InvestingPro analysis shows the company maintaining healthy balance sheet metrics.

The SEC filing notes that some participating lenders and their affiliates have previously provided commercial and investment banking services to Flex Ltd. and may continue to do so.

All information is based on a press release statement contained in the company’s SEC Form 8-K filing.

In other recent news, Flextronics has reported significant developments in its data center business, with fiscal year 2025 sales reaching approximately $4.8 billion, a 50% increase from the previous year. The company anticipates a mid-30% growth rate for fiscal year 2026 in this segment, driven by both organic and inorganic investments. Additionally, Fitch Ratings has upgraded Flextronics’ outlook to positive, maintaining a ’BBB-’ rating, citing improved financial policies and profitability. This follows KeyBanc’s decision to raise Flextronics’ stock price target to $60, highlighting the company’s differentiated data center strategy and superior gross margin expansion. In a strategic move, Flextronics has doubled its European footprint for data center power solutions, adding a new manufacturing site in Poland to meet increasing demand. Meanwhile, Nextracker has bolstered its board of directors with the appointment of three energy sector veterans, enhancing its expertise in policy, regulation, and corporate governance. Flextronics’ ongoing strategic initiatives, including acquisitions and capacity expansions, are part of its efforts to capitalize on the growing demand for data center technologies. These recent developments reflect Flextronics’ commitment to strengthening its market position and expanding its global operations.

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