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Get filing alertsFlex closes $1.45B acquisition of EP² with new 364-day term loan facility
Filed May 4, 2026 · Period ending April 30, 2026 · ~1 min read
Key Changes
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Flex completed its acquisition of Electrical Power Products (EP²) on May 4, 2026, financing the deal with a $1.45 billion delayed draw term loan facility arranged through Citibank.
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The credit facility matures in just 364 days after first draw, creating near-term refinancing pressure. Proceeds can be drawn as needed for the acquisition and general corporate purposes.
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Flex must maintain debt below 4x EBITDA and interest coverage above 3x earnings. Covenant violations could trigger default provisions on the $1.45B facility.
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Interest rates float with Term SOFR or Base Rate plus a margin tied to Flex's credit ratings, meaning borrowing costs will fluctuate with both market rates and the company's creditworthiness.
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The debt is unsecured by subsidiary guarantees initially, with only parent company Flex Ltd. obligated to repay, though subsidiaries may be added as guarantors later.
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Summary
Flex Ltd. closed its acquisition of Electrical Power Products (EP²) on May 4, 2026, funding the deal with a new $1.45 billion credit facility. The financing structure raises two important considerations for investors.
First, the facility has an unusually short 364-day maturity, meaning Flex will need to refinance or repay over $1 billion within a year—creating execution risk if credit markets tighten or the company's financial performance deteriorates.
Second, the facility imposes financial covenants requiring debt to stay below 4 times EBITDA and interest coverage above 3 times, which could constrain Flex's financial flexibility if the EP² integration proves challenging or if broader business conditions weaken. What matters now is whether the EP² business performs well enough to justify the leverage Flex has taken on. Investors should watch the company's next quarterly earnings report closely for two things: whether management provides specific financial targets for EP² contribution, and whether Flex's consolidated debt ratios remain comfortably below covenant thresholds. Any indication that covenants are tight or that refinancing the short-term facility is proving difficult would be a significant warning sign.
Section-by-Section Diff
Event · Item 1.01 — Entry into a Material Definitive Agreement
Item 1.01 — Entry into a Material Definitive Agreement filed; see Key Changes for terms.
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On April 30, 2026 (the “Closing Date”), Flex Ltd. (the “Company”) entered into a Credit Agreement (the “Credit Agreement”), by and among the Company, as borrower, the lenders party thereto, and Citibank, N.A., as administrative agent, which provides a senior delayed draw term loan credit facility (the “Credit Facility”) in an aggregate commitment amount of $1.45 billion.
Flex secured a new $1.45 billion delayed draw term loan facility with Citibank as administrative agent. This is a senior credit facility that the company can draw upon as needed rather than receiving all funds upfront. The facility has a short maturity of 364 days after first funding.
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Proceeds from the Credit Agreement are to be used for general corporate purposes including the financing of the Company’s acquisition of Electrical Power Products, Inc. (“EP²”), with such planned acquisition previously disclosed in the Company’s Current Report on Form 8-K filed on March 30, 2026, and as otherwise permitted under the Credit Agreement.
The primary purpose of this credit facility is to finance Flex's acquisition of Electrical Power Products, Inc. (EP²), which was previously announced in March 2026. The facility can also be used for general corporate purposes. This confirms the company is moving forward with the EP² acquisition and has secured the necessary financing.
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The Credit Agreement requires the maintenance of (i) a Debt/EBITDA Ratio (as defined in the Credit Agreement) not to exceed 4.00 to 1.00 as of the last day of any fiscal quarter of the Company and (ii) an Interest Coverage Ratio (as defined in the Credit Agreement) not to be less than 3.00 to 1.00 as of the last day of any fiscal quarter of the Company.
Flex must maintain two key financial ratios: debt cannot exceed 4 times EBITDA, and interest coverage must be at least 3 times. These covenants restrict how much additional debt the company can take on and require sufficient earnings to cover interest payments. Violation could trigger default provisions.
Event · Item 2.03 — Creation of a Direct Financial Obligation
FLEX disclosed creation of a direct financial obligation, with details incorporated by reference from Item 1.01.
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Item 2.03Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 of this Current Report on Form 8-K is hereby incorporated by reference into this Item 2.03.
The company disclosed the creation of a direct financial obligation or off-balance sheet arrangement. The specific details of this obligation are referenced in Item 1.01 of the same 8-K filing, which is not included in the provided text. This typically indicates new debt, credit facility, or similar financial commitment.
Event · Item 7.01 — Regulation FD Disclosure
Flex Ltd. completed its acquisition of EP² on May 4, 2026.
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On May 4, 2026, the Company issued a press release announcing that it had completed its acquisition of EP².
Flex Ltd. announced the completion of its acquisition of EP² on May 4, 2026. This represents the closing of a previously announced transaction, marking the formal integration of EP² into Flex's operations. The 8-K provides no additional details about purchase price, terms, or strategic rationale beyond confirming the deal has closed.
Event · Item 9.01 — Financial Statements and Exhibits
FLEX entered a new Credit Agreement dated April 30, 2026 with Citibank as administrative agent.
Added in current filing · verify on EDGAR →
Credit Agreement, dated as of April 30, 2026 among Flex Ltd., as borrower, the Lenders party thereto, and Citibank, N.A., as administrative agent.
FLEX disclosed entering into a new Credit Agreement effective April 30, 2026. The company is the borrower, with Citibank serving as administrative agent and multiple lenders participating. The 8-K does not provide details on the credit facility size, terms, interest rates, or purpose, which are likely contained in the full exhibit.
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