Knowles Electronics amends loan; obtaining C loan, increasing rates, changing covenants

By Sara Rosenberg

New York, March 31 - Knowles Electronics amended its credit facility, refinancing $31.7 million of the credit agreement, replacing the term loan A with a term loan C, increasing interest rates, waiving compliance with leverage and interest coverage ratios through June 29, 2003 and revising the ratios after that (see table 1), according to a filing with the Securities and Exchange Commission.

More specifically, under the amendment the interest rate on the revolver was changed to Libor plus 400 basis points from Libor plus 350 basis points and the interest rate on the term loan B was raised to Libor plus 500 basis points. The term loan C, which is due in June 2007, has an interest rate that totals 18.5%.

Furthermore, under the amendment, the size of the revolver was reduced to $15 million. In the event that term loan B is fully prepaid prior to June 30, 2006, the revolver will no longer be available and any outstanding amounts will become due and payable.

Quarterly amortization of the term loan B was increased to approximately $750,000 per quarter beginning June 30, 2003 through June 30, 2006, with the balance paid in four quarterly principal payments from Sept. 30, 2006 to June 29, 2007.

Knowles Electronics is an Itasca, Ill. transducer and acoustic component manufacturer.

Table 1: Knowles Electronics's new leverage and interest coverage ratios

Period Required Leverage Ratio Required Interest Coverage Ratio

Dec. 31, 2003 6.5 1.35

Dec. 31, 2004 6.0 1.45

Dec. 31, 2005 5.5 1.55

Dec. 31, 2006 5.0 1.65

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