Kemet obtains commitment for new $77.5 million credit facility

By Sara Rosenberg

New York, May 5 - Kemet Corp. has received a commitment for a $77.5 million credit facility from K Financing LLC, an affiliate of Platinum Equity Capital Partners, according to an 8-K filed with the Securities and Exchange Commission on Tuesday.

The facility consists of an up to $52.5 million term loan, a $12.5 million line of credit that may be borrowed from time to time but not reborrowed after being repaid, and a $12.5 million working capital loan.

The term loan is priced at 9% for cash payment, or 5% cash plus 7% PIK, and the line of credit and working capital loan are priced at the greater of Libor plus 700 basis points or 10%.

Financial covenants include a minimum consolidated EBITDA and fixed-charge coverage ratio and limitations on capital expenditures.

Proceeds from the term loan can only be used to purchase the company's 2.25% convertible senior notes due 2026 in a tender offer, the line of credit can be used for certain pre-approved capital expenditures, fees, expenses and other specified costs, and the working capital loan can be used for general working capital needs.

The term loan will mature on Nov. 15, 2012 and the line of credit and working capital loan will mature on the second anniversary of the consummation of the tender offer.

Closing is subject to, among other things, completion of the tender offer. The tender expires on June 2.

In connection with the commencement of the tender offer, the company amended its €60 million facility A and €35 million facility B with UniCredit Corporate Banking.

The facility A amendment revises certain financial covenants to align them with the financial covenants under the Platinum credit facility, modifies scheduled amortization and narrows the scope of an asset sale mandatory prepayment covenant.

The facility B amendment modifies scheduled amortization, extends the maturity to April 1, 2013 and removes a mandatory prepayment trigger upon a change of ownership.

The amendments will become effective only if the company consummates the tender offer on or before June 10.

Kemet is a Simpsonville, S.C.-based manufacturer of the majority of capacitor types.

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