Leading semiconductor manufacturer
Microchip Technology Inc.
) recently closed a new $2 billion credit agreement replacing its
erstwhile unsecured credit agreement to increase its borrowing
capacity. With this, the company expects to improve its financial
flexibility in order to better focus on its operating strategy to
reward its shareholders with attractive risk-adjusted returns.
MICROCHIP TECH (MCHP): Free Stock Analysis
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The five-year unsecured credit agreement with a consortium of
lenders includes a $1.65 billion revolving loan facility and $350
million term loan option. The debt contract also includes an
accordion feature that would enable Microchip to extend the
borrowing capacity to $2.3 billion and replaced the existing $750
million unsecured credit agreement.
Microchip intends to utilize the new credit line to address any
general corporate fund requirements, including potential
acquisitions and development opportunities in core markets. With
better-than-expected bookings and expedite requests in its
business, driven by strong demand and robust product designs,
Microchip anticipates to continue its bull run in the coming
Microchip develops and manufacturers microcontrollers, memory and
analog and interface products for embedded-control systems, which
are small, low-power computers designed to perform specific
tasks. Striking features such as quality, performance,
reliability, ease of use, pricing and diversity of products have
been the forte of Microchip to make it one of the
better-positioned companies in the semiconductor universe.
Microchip presently has a Zacks Rank #1 (Strong Buy). Other
players in the industry that are worth mentioning include
RDA Microelectronics, Inc.
MagnaChip Semiconductor Corporation
), each carrying Zacks Rank #2 (Buy).