Avnet terminates $350 million loan following Moody's downgrade

By Sara Rosenberg

New York, Sept. 9 - Avnet Inc. terminated its $350 million credit facility that was set to expire in October 2004 due to a ratings downgrade by Moody's Investors Service raising concerns over springing of liens.

"With the unfortunate announcement of the Moody's downgrade of our credit rating and the resulting potential springing of liens in our syndicated bank credit facility, we decided to terminate the bank facility," said Ray Sadowski, chief financial officer, in a news release.

"There are currently no amounts outstanding or expected to be outstanding before the facility's expiration date. It would be inappropriate to have liens spring when we do not expect to have any need to draw any funds under that facility. In the unlikely event there is a need for additional funding in the near-term, we believe that we have many options for alternative financing."

However, the company believes that with a current cash balance of nearly $400 million and its $350 million accounts receivable securitization program it has more than sufficient liquidity to meet capital requirements in the near to mid-term.

"We strongly disagree with the actions taken by Moody's in light of the continuing and significant improvement in our credit statistics as well as early indications of improving business conditions. With our accounts receivable securitization program and available cash, our liquidity is more than sufficient to fully benefit from the expected upturn in business as our focus on return on capital has increased working capital productivity to record levels," added Roy Vallee, chairman and chief executive officer, in the release.

Avnet is a Phoenix distributor of semiconductors, interconnect, passive and electromechanical components, embedded systems and computer products from leading manufacturers.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.