ON Semiconductor amends loan, changing financial covenants

By Sara Rosenberg

New York, March 3 - ON Semiconductor Corp. amended its senior credit facilities, modifying financial covenants to increase operating flexibility. In addition, as part of the plan to increase flexibility, the company sold $200 million 12% senior secured notes due 2010.

Specifically, under the amendment, the minimum interest expense coverage ratio and maximum leverage ratio requirements were eliminated through the final maturity in 2007, the minimum EBITDA maintenance requirement was set at $140 million for any four consecutive fiscal quarters and the maximum capital expenditure requirement for each fiscal year beginning in 2004 was set at $100 million, plus 50% of the amount, if any, by which EBITDA in the prior fiscal year exceeds $200 million, plus the unused amount of permitted capital expenditures in the prior year.

"Although ON Semiconductor has been in full compliance with the previous financial covenants, we believe the notes offering and bank amendment presented an opportunity to significantly improve the company's capital structure," said Keith Jackson, president and chief executive officer, in a news release. "These two transactions eliminate certain restrictive financial maintenance covenants for the duration of the senior bank facilities, and reduce required debt principal payments through 2006 by approximately $180 million. As a result of the senior secured notes issuance and the notes issuance that occurred in May 2002, as previously announced, outstanding amounts have been reduced under the company's senior credit facilities by approximately $460 million."

ON Semiconductor is a Phoenix supplier of semiconductor components.

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