Debt

Credit Agreement

On January 25, 2017, we entered into an Increase Term Joinder No. 2 to our Credit Agreement with respect to an incremental term loan B facility in an aggregate principal amount of $235.0 million under our existing Credit Agreement, dated as of January 15, 2016 (as amended, the "Credit Agreement"), with Morgan Stanley Senior Funding, Inc. ("MSSF"), as administrative agent and collateral agent, the other agents party thereto and the lenders referred to therein (collectively, the “Lenders”). In addition, on January 25, 2017, we entered into Amendment No. 2 to the Credit Agreement. Amendment No. 2 provides for, among other things (i) new pricing terms for term loan B outstanding under the Credit Agreement, (ii) certain modifications to the restricted payments provisions and (iii) certain modifications to Microsemi’s ability to incur incremental debt. The proceeds of the incremental term loan B facility were used to repay outstanding balances on the revolving credit facility under the Credit Agreement (the "Revolving Facility").

The Credit Agreement also requires us to pay a commitment fee for the unused portion of the Revolving Facility, which will be a minimum of 0.25% and a maximum of 0.35%, depending on the Company’s consolidated net leverage ratio. Interest for Base Rate loans is calculated on the basis of a 365/366-day year and interest for LIBOR-based loans is calculated on the basis of a 360-day year.

All principal amounts outstanding as of April 2, 2017, Eurodollar Rate loans and interest rate information of the Credit Agreement were as follows:



	Principal Outstanding		Base Rate		Base Rate Margin		Eurodollar Rate Margin		Eurodollar Floor		Applicable Rate
Revolving Facility	$	—	3.75	%	1.25	%	2.25	%	—	%	3.23	%
Term Loan A Facility	$	778.1	3.75	%	1.25	%	2.25	%	—	%	3.23	%
Term Loan B Facility	$	844.7	3.75	%	1.25	%	2.25	%	—	%	3.23	%

The margin for borrowings under the term loan A facility and Revolving Facility vary depending upon our consolidated net leverage ratio.

As of April 2, 2017, the fair value of principal outstanding on the Credit Agreement was $1,629.0 million. We classify this valuation as a Level 2 fair value measurement.

The obligations under the Credit Facilities are collateralized by a lien on substantially all of our personal property and material real property assets, subject in each case to certain customary exceptions.

Debt issuance costs recorded as a reduction to principal outstanding in the condensed consolidated balance sheets were $41.1 million as of April 2, 2017 and $44.0 million as of October 2, 2016.

Our Credit Agreement contains financial covenants including a maximum consolidated net leverage ratio and minimum fixed charge coverage ratio and also contains other customary affirmative and negative covenants and events of default. We were in compliance with our covenants as of April 2, 2017.

Amendment to Credit Agreement

On April 25, 2017, we entered into Amendment No. 3 to our Credit Agreement ("Amendment No. 3"). Amendment No. 3 provides for, among other things (i) new pricing terms for any revolving loans that may be outstanding from time to time under the Credit Agreement and (ii) new pricing terms for the term loan A facility. The new pricing terms do not vary depending on our consolidated net leverage ratio or any other financial maintenance covenant. Amendment No. 3 also fixes the commitment fee for the unused portion of the Revolving Facility at 0.25%. Immediately following the Amendment No. 3, the principal amounts outstanding, Eurodollar Rate loans and interest rate information under the Credit Agreement, were as follows:



	Principal Outstanding		Base Rate		Base Rate Margin		Eurodollar Rate Margin		Eurodollar Floor		Applicable Rate
Revolving Facility	$	—	3.75	%	0.75	%	1.75	%	—	%	2.74	%
Term Loan A Facility	$	778.1	3.75	%	0.75	%	1.75	%	—	%	2.74	%
Term Loan B Facility	$	844.7	3.75	%	1.25	%	2.25	%	—	%	3.24	%

Senior Unsecured Notes

On January 15, 2016, we completed the sale of $450.0 million of our 9.125% senior unsecured notes due April 2023 (the "Notes") to qualified institutional buyers and pursuant to Regulation S in a private offering exempt from the registration requirements of the Securities Act of 1933, as amended. The Notes were issued under an indenture, dated January 15, 2016, among Microsemi, the subsidiaries of Microsemi party thereto as note guarantors, and U.S. Bank National Association, as trustee (the "Indenture").

As of April 2, 2017, the fair value of principal outstanding on the Notes was $517.5 million. We classify this valuation as a Level 1 fair value measurement.

The Notes accrue cash interest at a rate of 9.125% per year, payable semi-annually on April 15 and October 15 of each year. The Notes mature on April 15, 2023. We may redeem the Notes, and the holders of the Notes may require us to repurchase the Notes, prior to the date of maturity in certain circumstances pursuant to the terms and conditions of the Indenture. The Indenture contains customary affirmative and negative covenants and events of default.