CELESTICA INCCLS
CELESTICA INC Debt Disclosure
CREDIT FACILITIES:
We are party to a credit agreement (Credit Facility) with Bank of America, N.A., as Administrative Agent, and the other lenders party thereto, which as of a June 2024 amendment (June 2024 Amendment), includes a term loan in the original principal amount of $250.0 (Term A Loan), a term loan in the original principal amount of $500.0 (Term B Loan, and collectively with the Term A Loan, the Term Loans), and a $750.0 revolving credit facility (Revolver). Prior to the June 2024 Amendment, the Credit Facility included a term loan in the original principal amount of $350.0 (Initial Term Loan) and a term loan in the original principal amount of $365.0 (Incremental Term Loan), the outstanding borrowings under each of
which were fully repaid with a substantial portion of the proceeds of the Term Loans, and commitments of $600.0 under the Revolver.
Borrowings under the Revolver bear interest, depending on the currency of the borrowing and our election for such currency, at: (i) term Secured Overnight Financing Rate (Term SOFR) plus 0.1% (Adjusted Term SOFR), (ii) Base Rate, (iii) Canadian Prime, (iv) an Alternative Currency Daily Rate, or (v) an Alternative Currency Term Rate plus a specified margin (each as defined in the Credit Facility). The margin for borrowings under the Revolver ranges from 1.50% to 2.25% for Adjusted Term SOFR, Alternative Currency Daily Rate or Alternative Currency Term Rate borrowings, and from 0.50% to 1.25% for Base Rate and Canadian Prime borrowings, in each case depending on the rate we select and a defined net leverage ratio. Commitment fees range from 0.30% to 0.45%, depending on our defined net leverage ratio. Outstanding amounts under the Term A Loan bear interest at Adjusted Term SOFR or Base Rate, plus a margin ranging from 1.50% — 2.25% for Adjusted Term SOFR borrowings and from 0.50% — 1.25% for Base Rate borrowings, in each case depending on the rate we select and our defined net leverage ratio. Outstanding amounts under the Term B Loan bear interest at Term SOFR plus 1.75% or the Base Rate plus 0.75%, depending on the rate we select. At December 31, 2025, outstanding amounts under the Term A Loan bore interest at Adjusted Term SOFR plus 1.75%; outstanding amounts under the Term B Loan bore interest at Term SOFR plus 1.75%; and no amounts were outstanding under the Revolver.
We have entered into interest rate swap agreements to hedge against our exposures to the interest rate variability on a portion of our Term Loans. See note 18 for further detail.
The Term A Loan and the Term B Loan require quarterly principal repayments of $3.125 and $1.250, respectively, and both require a lump sum repayment of the remainder outstanding at maturity. Any outstanding amounts under the Revolver are due at maturity. Except under specified circumstances, and subject to the payment of breakage costs (if any), we are generally permitted to make voluntary prepayments of outstanding amounts under the Revolver and the Term Loans without any other premium or penalty. Repaid amounts on the Term Loans may not be re-borrowed. We are also required to make annual prepayments of outstanding obligations under the Credit Facility (applied first to the Term Loans, then to the Revolver, in the manner set forth in the Credit Facility) ranging from 0% — 50% (based on a defined leverage ratio) of specified excess cash flow for the prior fiscal year. No prepayments based on excess cash flow were required in 2025, or will be required in 2026. In addition, prepayments of outstanding obligations under the Credit Facility (applied as described above) may also be required in the amount of specified net cash proceeds received above a specified annual threshold (including proceeds from the disposal of certain assets). No prepayments based on net cash proceeds were required in 2025, or will be required in 2026.
The Term A Loan and the Revolver each mature in June 2029. The Term B Loan matures in June 2031. At December 31, 2025, the aggregate remaining mandatory principal repayments under the Credit Facility are as follows (assuming no further mandatory principal repayments are required based on excess cash flow or net cash proceeds):
| 2026 | 2027 | 2028 | 2029 | 2030 | Thereafter | Total | |||||||||||||||||||||||||||||||||||
Term A Loan | $ | 12.5 | $ | 12.5 | $ | 12.5 | $ | 193.7 | $ | — | $ | — | $ | 231.2 | |||||||||||||||||||||||||||
Term B Loan | $ | 5.0 | $ | 5.0 | $ | 5.0 | $ | 5.0 | $ | 5.0 | $ | 467.5 | $ | 492.5 | |||||||||||||||||||||||||||
The Credit Facility has an accordion feature that allows us to increase the Term Loans and/or commitments under the Revolver by $200.0, plus an unlimited amount to the extent that a defined leverage ratio on a pro forma basis does not exceed specified limits, in each case on an uncommitted basis and subject to the satisfaction of certain terms and conditions. The Revolver also includes a $50.0 sub-limit for swingline loans, providing for short-term borrowings up to a maximum of ten business days, as well as a $150.0 sub-limit for letters of credit (L/Cs), in each case subject to the overall Revolver credit limit. The Revolver permits us and certain designated subsidiaries to borrow funds (subject to specified conditions) for general corporate purposes, including for capital expenditures, certain acquisitions, and working capital needs.
We are required to comply with certain restrictive covenants under the Credit Facility, including those relating to the incurrence of certain indebtedness, the existence of certain liens, the sale of certain assets, specified investments and payments, sale and leaseback transactions, and certain financial covenants relating to a defined interest coverage ratio and leverage ratio that are tested on a quarterly basis. Our Credit Facility also limits share repurchases for cancellation if our consolidated secured leverage ratio (as defined in such facility) exceeds a specified amount (Repurchase Restriction). At December 31, 2025 and December 31, 2024, we were in compliance with all restrictive and financial covenants under the Credit Facility, and the Repurchase Restriction was not in effect.
The obligations under the Credit Facility are guaranteed by us and certain specified subsidiaries. Subject to specified exemptions and limitations, all assets of the guarantors are pledged as security for the obligations under the Credit Facility. The Credit Facility contains customary events of default. If an event of default occurs and is continuing (and is not waived), the Administrative Agent may declare all amounts outstanding under the Credit Facility to be immediately due and payable, and may cancel the lenders’ commitments to make further advances thereunder. In the event of a payment or other specified defaults, outstanding obligations accrue interest at a specified default rate. No such defaults occurred during 2023 to 2025. The obligations under the Credit Facility rank pari passu with other unsecured and unsubordinated creditors.
The following table sets forth, at the dates shown: outstanding borrowings under the Credit Facility, excluding ordinary course L/Cs; notional amounts under our interest rate swap agreements, outstanding finance lease obligations; and information regarding outstanding L/Cs, surety bonds and overdraft facilities:
| Outstanding borrowings | Notional amounts under interest rate swaps (note 18) | ||||||||||||||||
| December 31 2025 | December 31 2024 | December 31 2025 | December 31 2024 | ||||||||||||||
Borrowings under the Revolver | $ | — | $ | — | $ | — | $ | — | |||||||||
Borrowings under the Term Loans | |||||||||||||||||
Term A Loan | 231.2 | 243.7 | 120.0 | 130.0 | |||||||||||||
Term B Loan | 492.5 | 497.5 | 230.0 | 200.0 | |||||||||||||
| Total | $ | 723.7 | $ | 741.2 | $ | 350.0 | $ | 330.0 | |||||||||
| Total borrowings under Credit Facility | $ | 723.7 | $ | 741.2 | |||||||||||||
Unamortized debt issuance costs related to Term Loans | (5.2) | (6.2) | |||||||||||||||
Finance lease obligations (see note 7) | 58.0 | 61.7 | |||||||||||||||
| $ | 776.5 | $ | 796.7 | ||||||||||||||
Total Credit Facility and finance lease obligations: | |||||||||||||||||
| Current portion | $ | 26.0 | $ | 26.5 | |||||||||||||
| Long-term portion | 750.5 | 770.2 | |||||||||||||||
| $ | 776.5 | $ | 796.7 | ||||||||||||||
L/Cs, guarantees, surety bonds and overdraft facilities: | |||||||||||||||||
| Outstanding L/Cs under the Revolver | $ | 10.8 | $ | 11.1 | |||||||||||||
| Outstanding bank guarantees and surety bonds outside the Revolver | 38.1 | 23.0 | |||||||||||||||
| Total | $ | 48.9 | $ | 34.1 | |||||||||||||
| Available uncommitted bank overdraft facilities | $ | 198.5 | $ | 198.5 | |||||||||||||
| Amounts outstanding under available uncommitted bank overdraft facilities | $ | — | $ | — | |||||||||||||
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.