Item 1.01. Entry into a Material Definitive Agreement.
Summary
On March 1, 2019, a subsidiary of Tesla, Inc. (“
Tesla
”) entered into an agreement with a syndicate of lenders in China for an unsecured 12-month term facility of up to RMB 3.5 billion, to be used in connection with our Gigafactory Shanghai.
On March 6, 2019, Tesla amended and restated its ABL Credit Agreement to increase the total lender commitments by $500.0 million to $2.425 billion, permit Tesla to obtain up to $200.0 million in additional commitments, and extend the term of the vast majority of the total commitments to 2023.
Tesla Shanghai Syndication Loan Agreement
On March 1, 2019, Tesla (Shanghai) Co., Ltd. (“
Tesla Shanghai
”) entered into a Syndication Loan Agreement (the “
China Loan Agreement
”) with China Construction Bank Corporation (Shanghai Pudong Branch), Agricultural Bank of China Limited (Shanghai Changning Sub-branch), Industrial and Commercial Bank of China Limited (Shanghai Lingang Sub-branch) and Shanghai Pudong Development Bank Co., Ltd. (Shanghai Branch), as lenders, pursuant to which Tesla Shanghai may draw funds from time to time on an unsecured term facility of up to a total of RMB 3.5 billion (or the equivalent amount drawn in U.S. dollars). The proceeds of such loans may be used only for expenditures related to the construction of and production at our Gigafactory Shanghai. The China Loan Agreement will terminate and all outstanding loans will mature on March 4, 2020, and the loan facility is non-recourse to Tesla or its assets.
Outstanding borrowings pursuant to the China Loan Agreement accrue interest at a rate equal to: (i) for RMB-denominated loans, 90% of the one-year rate published by the People’s Bank of China, and (ii) for U.S. dollar-denominated loans, the sum of one-year LIBOR plus 1.0%. Tesla Shanghai is subject to certain covenants, including a restriction on liens and other security interests on assets acquired and/or constructed using borrowings under the China Loan Agreement, other than specified exceptions, as well as certain customary covenants and events of default. As of March 7, 2019, RMB 31.1 million in loans were outstanding pursuant to the China Loan Agreement.
Amendment and Restatement of ABL Credit Agreement
On March 6, 2019, Tesla, Inc. (“
Tesla
”) and its subsidiary Tesla Motors Netherlands B.V. (together with Tesla, the “
Borrowers
”), entered into the Amendment and Restatement Agreement (the “
Amendment and Restatement Agreement
”) with Deutsche Bank AG New York Branch, as administrative agent and collateral agent, and the lenders and other agents party thereto, pursuant to which the ABL Credit Agreement dated as of June 10, 2015 (as amended and restated, the “
ABL Credit Agreement
”) was amended and restated in its entirety. Among other things, the Amendment and Restatement Agreement amended the ABL Credit Agreement to increase the revolving commitments by $500.0 million to a total of $2.425 billion, to extend the maturity date from June 10, 2020 to July 1, 2023 as to approximately $2.228 billion of the total revolving commitments, to increase the letter of credit subfacility from $200.0 million to $400.0 million, and to amend certain covenants and baskets. As amended, the ABL Credit Agreement also permits the Borrowers, subject to the terms and conditions set forth therein, to obtain up to $200.0 million of additional revolving commitments and an extension of the remaining commitments maturing on June 10, 2020 to July 1, 2023.