Super Micro Ends Burdensome Loan Agreements

In recent news, Super Micro Computer made a strategic decision to end loan agreements with Cathay Bank and Bank of America. These loan agreements had become more demanding due to amendments, prompting Super Micro to take action. By terminating these agreements, Super Micro can now access additional cash and remove restrictions related to its late filing of audited financial statements.

The decision to end these loan agreements came after a series of challenges faced by Super Micro, including allegations of accounting manipulation made by short seller Hindenburg Research in August. As a result, Super Micro delayed filing its financial reports for the fiscal year ended June 30, leading to compliance issues with Nasdaq.

To address these challenges, Super Micro amended its agreement with Cathay Bank in late October, providing more time to file financial reports and requiring a minimum cash balance to be maintained. However, their accountant, Ernst & Young, resigned, leading to further complications.

In an effort to regain compliance with Nasdaq’s listing requirements, Super Micro filed a plan and appointed BDO USA as its new accounting firm. On November 25, the loan pact with Cathay Bank ended, freeing Super Micro from cash balance obligations.

The loan agreement with Bank of America, dating back to April 2018, was also terminated on November 1. Changes to the agreement and additional term loans had been made earlier in the year to provide working capital, but the amendments ultimately led to the termination of the agreement.

Overall, these recent developments highlight the challenges faced by Super Micro and its efforts to overcome them. By ending these loan agreements, the company is taking steps to ensure financial stability and flexibility moving forward.