Kimball Electronics secures $150 million five-year credit agreement

By Sarah Lizee

Olympia, Wash., Aug. 1 – Kimball Electronics, Inc. entered into a $150 million five-year amended and restated credit agreement on Friday with JPMorgan Chase Bank, NA as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

The credit agreement, which matures on July 27, 2023, amends and restates the company’s existing five-year credit agreement, which was scheduled to mature on Oct. 31, 2019.

The company may request to increase the amount available for borrowing to $225 million.

Revolving credit loans may consist of advances in dollars or any other currency that is agreed to by the lenders. Loans can also be in the form of swingline loans in dollars, which will be on a case by case basis.

A portion of the credit facility, not to exceed $15 million of the principal amount, will be available for the issuance of letters of credit.

Borrowings bear interest at Libor plus 125 basis points to 175 bps, based on the company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA. The commitment fee ranges from 20 bps to 25 bps. Initially, interest is Libor plus 125 bps and the commitment fee is 20 bps.

Financial covenants include a ratio of consolidated total debt minus unencumbered U.S. cash on hand in excess of $15 million to adjusted consolidated EBITDA to not be greater than 3 to 1, and a fixed charge coverage ratio to not be less than 1.1 to 1.

Proceeds will be used for working capital and general corporate purposes, including capital expenditures and acquisitions. The company said it intends to fund its pending GES acquisition with proceeds from the credit agreement.

As of Wednesday, there was $35.1 million in borrowings outstanding under the credit agreement, including $20.2 million of borrowings to fund a portion of the GES acquisition to be held in an escrow account until closing of the acquisition.

JPMorgan is the bookrunner and lead arranger and Bank of America is the documentation agent.

Based in Jasper, Ind., Kimball is a global contract electronics manufacturing services company that specializes in durable electronics for the automotive, medical, industrial and public safety markets.

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