FORT LAUDERDALE, Fla., Oct. 29, 2018 (GLOBE NEWSWIRE) -- KEMET Corporation (NYSE: KEM), a leading global supplier of passive electronic components, announced today that TOKIN Corporation, a Japanese incorporated subsidiary of the Company, has entered into a new 33 billion Japanese Yen Term Loan Facility to be funded by a syndicated bank group in Japan lead by Sumitomo Mitsui Trust Bank Limited (SMTB). The Company expects the closing and funding of the new Term Loan Facility, which is subject to customary terms and conditions, to occur on or around November 7, 2018.
“We are delighted to find a partner like SMTB to complete this refinancing in Japan. This will provide operating flexibility to achieve our long-term growth objectives which includes growing in Japan as well as the greater Asian Pacific region,” stated Per Loof, the Company’s Chief Executive Officer. “We believe that this new partnership with SMTB and the other members of the bank group is the beginning of a long-term relationship that will benefit all participants with growth opportunities and prospects for further committed capital for the Company,” continued Mr. Loof.
The proceeds from the new Term Loan Facility are being used by the Company, together with cash on hand, to prepay in full all of the outstanding amounts under the Company’s existing Term Loan Credit Agreement dated April 28, 2017 (the “Existing Term Facility”), by and among the Company, KEC, the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent, and to pay related fees, costs and expenses (including a prepayment penalty of 1%). The Company currently has approximately $323.4 million outstanding under the Existing Term Facility. The new Term Loan Facility consists of (i) a ¥16.5 billion (approximately $148 million) Term Loan A tranche (the “Term Loan A”) and (ii) a ¥16.5 billion (approximately $148 million) Term Loan B tranche (the “Term Loan B”). Principal payments under the Term Loan A are required semi-annually, in the amount of ¥1,375,000 (approximately $12.3 million), while the Term Loan B is due in one payment at maturity. Interest payments are due semi-annually, with the interest rate based on a margin over the six-month Japanese Yen Tokyo Interbank Offered Rate (TIBOR). The applicable margin for Term Loan A is 2.00% and for Term Loan B is 2.25%. The current six-month TIBOR rate is approximately 13 basis points. The new Term Loan Facility provides KEMET with lower annual cash interest expenses, resulting in interest expense savings of approximately $21 million annually and results in an increase in earnings per share of approximately $0.35 cents per diluted share compared to the current run rate on an annual basis. The new Term Loans mature in September 2024. KEMET Corporation and certain subsidiaries of TOKIN will be providing guarantees of the obligations under the Term Loan Facility, which will also be secured by certain assets, properties and equity interests of TOKIN and its material subsidiaries.
In connection with the closing of the new Term Loan Facility, KEMET also entered into an amendment to its revolving credit facility led by Bank of America, N.A. The amendment to the revolving credit facility provides KEMET with, among other things, increased flexibility for certain restricted payments, and also releases certain pledges to allow the Company to complete the refinancing. The revolving credit facility is currently undrawn.
For details of the specific terms of the new Term Loan Credit Facility and the amendment to the revolving credit facility, please refer to the Company’s Form 8-K related to these transactions. Sumitomo Mitsui Trust Bank was the sole lead arranger for the Term Loan Credit Facility and Jenner & Block LLP and Mori Hamada & Matsumoto were the Company’s legal counsel. Nagashima Ohno & Tsunematsu acted as legal counsel to the sole lead arranger.
About KEMET
The Company’s common stock is listed on the NYSE under the ticker symbol “KEM” (NYSE: KEM). At the Investor Relations section of our web site at http://www.kemet.com/IR, users may subscribe to KEMET news releases and find additional information about our Company. KEMET offers our customers the broadest selection of capacitor technologies in the industry, along with an expanding range of electromechanical devices, electromagnetic compatibility solutions and supercapacitors. Our vision is to be the preferred supplier of electronic component solutions demanding the highest standards of quality, delivery and service. Additional information about KEMET can be found at http://www.kemet.com.
