XML 28 R18.htm IDEA: XBRL DOCUMENT v3.22.1
Borrowings
 9 Months Ended
Mar. 25, 2022
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)    
RateConditionsMaturity
As of
March 25, 2022
As of
June 25, 2021
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$30,468 $39,609 
Less: Current portion(12,188)(12,188)
Less: Unamortized debt issuance costs, non-current portion(39)(63)
Long-term borrowings, non-current portion, net$18,241 $27,358 
(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 25, 2022 and March 26, 2021 were as follows:
 Nine Months Ended
(amount in thousands)March 25,
2022		March 26,
2021
Opening balance$39,609 $51,797 
Borrowings during the period— — 
Repayments during the period(9,141)(9,141)
Closing balance$30,468 $42,656 
As of March 25, 2022, future maturities of long-term borrowings during each fiscal year were as follows:
(amount in thousands) 
2022 (remaining three months)
$3,047 
202315,233 
20249,141 
20253,047 
Total$30,468 
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”), which 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 that 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 (the "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 25, 2022, the Company recorded $0.6 million and $1.7 million, respectively, of interest expense in connection with this term loan, including impact from interest rate swaps. $0.3 million and $0.6 million of these interest expenses were capitalized during the three and nine months ended March 25, 2022, respectively, in a new manufacturing building at the Company's Chonburi campus.
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 of 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 25, 2022, the Company was in compliance with all of its financial covenants under the Term Loan Agreement.
The events of default under the Term Loan Agreement include failure to timely pay amounts due under the Term Loan Agreement or the related finance documents, 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 25, 2022, there was $30.5 million outstanding under the term loan.