8-KMaterial AgreementsFinancial EventsOther Events+1

ENTEGRIS INC 8-K Report, Material Agreement (Jul 23, 2009)

Filed July 23, 2009For Securities:ENTG

Summary

Entegris, Inc. (ENTG) filed an 8-K on July 23, 2009, reporting a material amendment to its Credit Agreement with Wells Fargo Bank, National Association, dated July 17, 2009. The primary focus of this amendment is to adjust the calculation of the fixed asset component of the company's borrowing base. This change was implemented to prevent an immediate $4.5 million mandatory paydown on the credit facility, which would have been triggered by a recent fixed asset appraisal. The amendment introduces a structured step-down in the valuation of fixed assets used in the borrowing base calculation over the next few fiscal quarters. While this modification provides immediate relief from a paydown obligation and offers greater flexibility in follow-on investments in a private company, investors should note that the overall borrowing capacity under the credit facility may be adjusted downward over time depending on the evolving contribution of fixed assets and other components of the borrowing base (inventory, accounts receivable).

Key Highlights

  • 1Entegris amended its Credit Agreement with Wells Fargo on July 17, 2009.
  • 2The amendment adjusts the calculation of the fixed asset component of the company's borrowing base.
  • 3This change averted an immediate $4.5 million mandatory paydown on the credit facility.
  • 4The adjustment provides greater discretion for follow-on investments in a privately-held company.
  • 5Fixed asset valuation within the borrowing base will step down in October 2009, January 2010, and April 2010.
  • 6The overall borrowing limit may be affected by these valuation adjustments over time.

Frequently Asked Questions

The main purpose of the amendment is to alter how fixed assets are valued for the purpose of calculating the company's borrowing base under its credit facility. This was done to avoid a mandatory paydown of $4.5 million that was triggered by a recent fixed asset appraisal.

The amendment introduces a 'step down' in the valuation of fixed assets used in the borrowing base calculation, occurring on the last day of fiscal October 2009, January 2010, and April 2010. This means the contribution of fixed assets to the total borrowing capacity will decrease over these periods.

Yes, while the amendment provides immediate relief from a paydown and offers flexibility, the planned step-down in fixed asset valuation could lead to a downward adjustment in the overall borrowing cap over time, depending on the performance of other components of the borrowing base such as inventory and accounts receivable.

The amendment grants Entegris greater discretion regarding follow-on investments in a specific privately-held company. This suggests the company sought to preserve capital or borrowing capacity for strategic investments.