v3.21.1

Borrowings | 9 Months Ended
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Mar. 26, 2021
Debt Disclosure [Abstract] |
Borrowings | Borrowings The Company’s total borrowings, including current and non-current portions of long-term borrowings, consisted of the following:
(amount in thousands) |  |  |  |  |  |  |
Rate | Conditions |  | Maturity |  | As of March 26, 2021 |  | As of June 26, 2020
Long-term borrowings, current portion, net: |  |  |  |  |  |  |
Long-term borrowings, current portion |  |  |  |  | $ | 12,188 |  |  | $ | 12,188 |
Less: Unamortized debt issuance costs – current portion |  |  |  |  | (32) |  |  | (32) |
Long-term borrowings, current portion, net |  |  |  |  | $ | 12,156 |  |  | $ | 12,156 |
Long-term borrowings, non-current portion, net: |  |  |  |  |  |  |
Term loan borrowings: |  |  |  |  |  |  |
3-month LIBOR +1.35% per annum (1) | Repayable in quarterly installments |  | June 2024 |  | $ | 42,656 |  |  | $ | 51,797 |
Less: Current portion |  |  |  |  | (12,188) |  |  | (12,188) |
Less: Unamortized debt issuance costs – non-current portion |  |  |  |  | (71) |  |  | (95) |
Long-term borrowings, non-current portion, net |  |  |  |  | $ | 30,397 |  |  | $ | 39,514 |
(1)We have entered into interest rate swaps that effectively fix a series of our future interest payments on our term loans. Refer to Note 6. The movements of long-term borrowings for the nine months ended March 26, 2021 and March 27, 2020 were as follows:
| Nine Months Ended
(amount in thousands) | March 26, 2021 |  | March 27, 2020
Opening balance | $ | 51,797 |  |  | $ | 60,938 |
Borrowings during the period | — |  |  | 60,938 |
Repayments during the period | (9,141) |  |  | (67,032) |
Closing balance | $ | 42,656 |  |  | $ | 54,844 |
As of March 26, 2021, future maturities of long-term borrowings during each fiscal year were as follows:
(amount in thousands) |
2021 (remaining three months) | $ | 6,094 |
2022 | 12,187 |
2023 | 12,187 |
2024 | 12,188 |
Total | $ | 42,656 |
Credit facility agreements: Bank of Ayudhya Public Company Limited On August 20, 2019, Fabrinet Thailand (the “Borrower”) and Bank of Ayudhya Public Company Limited (the “Bank”) entered into a Credit Facility Agreement (the “Credit Facility Agreement”). The Credit Facility Agreement provides for a facility of 110.0 million Thai baht (approximately $3.6 million based on the applicable exchange rate as of September 27, 2019) and $160.9 million which may be used for, among other things, an overdraft facility, short-term loans against promissory notes, a letter of guarantee facility, a term loan facility and foreign exchange facilities. The Bank may approve any request for extension of credit under the Credit Facility Agreement and may increase or decrease any facility amount in its sole discretion. Under the Credit Facility Agreement, on August 20, 2019, the Borrower and the Bank entered into a Term Loan Agreement pursuant to which the Borrower drew down on September 3, 2019 a term loan in the original principal amount of $60.9 million. The proceeds from the term loan, together with cash on hand, were used to repay outstanding obligations under the Company’s previous syndicated senior credit facility agreement. The term loan accrues interest at 3-month LIBOR plus 1.35% and is repayable in quarterly installments of $3.0 million, commencing on September 30, 2019. The term loan will mature on June 30, 2024. The Borrower may prepay the term loan in whole or in part at any time without premium or penalty. Any portion of the term loan repaid or prepaid may not be borrowed again. During the three and nine months ended March 26, 2021, the Company recorded $0.2 million and $0.6 million, respectively, of interest expense in connection with this term loan. Any borrowings under the Credit Facility Agreement, including those borrowings under the Term Loan Agreement, are guaranteed by Fabrinet and secured by land and buildings owned by the Borrower in the Pathumthani and Chonburi Provinces in Thailand. The Term Loan Agreement contains affirmative and negative covenants applicable to the Borrower, including delivery of financial statements and other information, compliance with laws, maintenance of insurance, restrictions on granting security interests or liens on its assets, disposing of its assets, incurring indebtedness and making acquisitions. While the term loan is outstanding, the Borrower is required to maintain a loan to value of the mortgaged real property ratio of not greater than 65%. If the loan to value ratio is not maintained, the Borrower will be required to provide additional security or prepay a portion of the term loan in order to restore the required ratio. The Company is also required to maintain a debt service coverage ratio of at least 1.25 times and a debt-to-equity ratio less than or equal to 1.0 times. In the case of any payment of a dividend by the Company, its debt service coverage ratio must be at least 1.50 times. As of March 26, 2021, the Company was in compliance with all of its financial covenants under the Term Loan Agreement. The events of default in the Term Loan Agreement include failure to pay amounts due under the Term Loan Agreement or the related finance documents when due, failure to comply with the covenants under the Term Loan Agreement or the related finance documents, cross default with other indebtedness of the Borrower, events of bankruptcy or insolvency in respect of the Borrower, and the occurrence of any event or series of events that in the opinion of the Bank has or is reasonably likely to have a material adverse effect. As of March 26, 2021, there was $42.7 million outstanding under the term loan. Bank of America, N.A. On May 22, 2014, the Company and a consortium of banks, entered into a syndicated senior credit facility agreement led by Bank of America (the “Bank of America Facility Agreement”). The Bank of America Facility Agreement provided for a $200.0 million credit line, comprised of a $150.0 million revolving loan facility and a $50.0 million delayed draw term loan facility. From time to time, the Company amended the Bank of America Facility Agreement, before repaying all outstanding amounts under the agreement and terminating such agreement on September 10, 2019. The most recent amendment on June 4, 2018 (i) reduced the revolving commitments thereunder from $150.0 million to $25.0 million, (ii) refinanced the outstanding amounts under the revolving loan and term loan facilities into a $65.0 million term loan which was to be repaid in quarterly installments through the maturity date of June 04, 2023; and (iii) reduced the interest rate margins and commitment fees. The term loan bore interest, at the Company’s option, at a rate per annum equal to a LIBOR rate plus a spread of 1.50% to 2.25%, or a base rate plus a spread of 0.50% to 1.25%. During the three months ended March 27, 2020, the Company had no interest expense related to this term loan. During the nine months ended March 27, 2020, the Company recorded $0.5 million of interest expense in connection with this term loan. On September 10, 2019, the Company fully repaid $61.0 million in principal, accrued interest and other fees under the agreement. The early termination of this agreement did not trigger any early termination fees.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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