Avnet amends loan to extend deadline for capital markets transaction

By Sara Rosenberg

New York, Dec. 17 - Avnet Inc. modified the springing lien provision in its multiyear bank facility, extending the due date for completing a capital markets transaction to Feb. 14, 2003 from Dec. 15, 2002. The postponement of the trigger date allows the company additional time to evaluate its financing alternatives including the possible timing and structure of a long-term bond offering.

Equity-based financing will not be pursued.

In return for the amendment, the company has agreed that the springing lien would trigger if it borrows any money under the facility, other than certain letter of credit obligations, prior to the capital markets transaction.

Furthermore, the company amended its existing accounts receivable securitization program to lower a debt ratings trigger to Ba2 or BB.

"We currently have no outstanding drawings on the $300 million capacity multiyear bank facility, and therefore we felt the postponement of the springing lien provision was warranted. We have seen some recent improvement in the capital markets, but postponement gives us more time to evaluate long-term debt financing alternatives, obtain the most appropriate terms on a financing transaction, and optimize Avnet's results for our investors. Finalizing the agreement to restructure the debt ratings trigger on the accounts receivable securitization program also provides the company additional flexibility," said Ray Sadowski, chief financial officer, in a news release.

"We currently have ample liquidity with over $740 million of total capacity available to the company, and we expect to continue to generate positive cash flow over the next few quarters. While our liquidity position does not compel us to access the capital markets, we have stated before that it is our desire to replace maturing long-term debt with long-term financing instruments. We are continuing to look at bonds as well as other forms of multiyear bank lending to meet our short and longer term capital structure requirements," Sadowski concluded.

Avnet is a Phoenix distributor of semiconductors, electronic components, enterprise computer products and services and embedded sub-systems from manufacturers.

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