JASPER, IN – Kimball Electronics, Inc. (NASDAQ:KE), a global electronic manufacturing services provider with a market capitalization of $451 million, has entered into an amended and restated credit agreement, expanding its financial flexibility with a new term loan facility and updated revolving credit commitments.
The agreement, filed with the SEC today, modifies the company's existing credit facilities and replaces a secondary credit facility. According to InvestingPro data, the company maintains a strong financial health score of 2.53, with liquid assets comfortably exceeding short-term obligations.
The new Restated Credit Agreement, dated December 20, 2024, involves a consortium of lenders with JPMorgan Chase (NYSE:JPM) Bank, N.A. serving as the Administrative Agent and Bank of America (NYSE:BAC), N.A. as the Documentation Agent. The agreement introduces a $100 million term loan repayable in scheduled quarterly installments starting March 31, 2025, with a maturity date of December 2029.
With total debt standing at $246 million and a current ratio of 2.28, InvestingPro analysis reveals 8 additional key financial metrics and insights available to subscribers. This term loan facility is in addition to the company's revolving credit commitments, which remain at $300 million with an optional increase of up to $150 million.
The proceeds from the term loan will be used to refinance existing debt, including revolving borrowings, pay off the indebtedness under the now-terminated secondary credit facility, and for general corporate purposes. Kimball Electronics has borrowed the full $100 million available under the term loan facility as part of the agreement.
Interest rates for borrowings under the Restated Credit Agreement will vary based on the type of borrowing and the company's leverage ratio, with options including the Secured Overnight Financing Rate (SOFR) for U.S. dollar-denominated borrowings and the Euro Interbank Offered Rate (EURIBOR) for Euro-denominated borrowings. An Alternate Base Rate (ABR) is also defined for other scenarios.
The company's financial covenants from the previous Primary Credit Facility remain unchanged, requiring a leverage ratio of no greater than 3.0 to 1.0, with temporary allowances following material acquisitions, and an interest coverage ratio of at least 3.5 to 1.0.
Concurrent with the new agreement, Kimball Electronics fully repaid and terminated its secondary credit facility, which was originally set to mature on January 3, 2025.
The Restated Credit Agreement is detailed in the SEC filing, which serves as the source for this information. The move by Kimball Electronics is seen as a strategic effort to optimize its capital structure and support ongoing operations and growth initiatives.
Trading at $18.37 per share, the stock is currently aligned with its Fair Value according to InvestingPro analysis, which provides comprehensive research reports covering over 1,400 US stocks, including detailed financial health assessments and expert insights.
In other recent news, Kimball Electronics experienced a challenging first quarter, reporting a 15% decrease in net sales year-over-year to $374.3 million. Despite the decline in sales, the company managed to significantly reduce its debt by nearly $50 million, reaching its lowest level in two years. This financial maneuvering reflects Kimball's focus on strengthening its balance sheet amidst a backdrop of declining demand in key sectors such as automotive and medical.
As part of its strategy, Kimball Electronics is expanding its capabilities in Mexico and focusing on strategic verticals, including automotive, medical, and industrial sectors. The company projects net sales for the fiscal year 2025 to range between $1.44 billion and $1.54 billion. Analysts are closely monitoring these developments, noting the company's efforts to manage operational efficiencies and control costs effectively.
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