8-KMaterial AgreementsFinancial EventsOther Events+1

ENTEGRIS INC 8-K Report, Material Agreement (Aug 17, 2009)

Filed August 17, 2009For Securities:ENTG

Summary

Entegris, Inc. (ENTG) filed an 8-K on August 17, 2009, reporting a "Second Amendment" to its Credit Agreement with Wells Fargo Bank, National Association, as agent, dated August 11, 2009. This amendment significantly alters the company's financial flexibility regarding debt and equity offerings. Previously, the company was prohibited from issuing debt and required to use 100% of net proceeds from equity offerings to prepay outstanding debt, which also reduced its borrowing base. The Second Amendment introduces crucial changes by permitting Entegris to issue unsecured convertible debt securities, subject to certain conditions, including compliance with financial covenants and a minimum net proceeds of $75 million. While 100% of proceeds from any such offering (debt or equity) must still be used to prepay outstanding amounts under the agreement, the impact on the borrowing base has been moderated. Specifically, for offerings completed by August 15, 2010, the borrowing base will be reduced by only 50% of the net proceeds, and revolving commitment amounts will also be reduced by 50%. After this date, the reduction reverts to 100%. This provides Entegris with enhanced liquidity and strategic options in the near term.

Key Highlights

  • 1Entegris amended its Credit Agreement with Wells Fargo on August 11, 2009 (the "Second Amendment").
  • 2The amendment permits the issuance of unsecured convertible debt securities (a "Qualifying Debt Offering"), subject to certain conditions.
  • 3Key conditions for a Qualifying Debt Offering include compliance with financial covenants and receipt of at least $75 million in net proceeds.
  • 4100% of net proceeds from any Qualifying Debt Offering or equity offering must be used to prepay outstanding debt.
  • 5The borrowing base and revolving commitment amounts are now reduced by only 50% of net proceeds from Qualified Offering Receipts until August 15, 2010, after which the reduction becomes 100%.
  • 6The company had approximately $129.5 million in outstanding borrowings as of August 12, 2009, with a maturity date of November 1, 2011.
  • 7The amendment aims to provide Entegris with greater financial flexibility and liquidity, particularly if it raises additional capital.

Frequently Asked Questions

The main purpose of the Second Amendment is to provide Entegris with increased financial flexibility. It allows the company to issue unsecured convertible debt securities and modifies how the borrowing base and revolving commitments are affected by debt and equity offerings, thereby potentially enhancing liquidity.

To issue convertible debt, Entegris must satisfy certain conditions, including ongoing compliance with the financial covenants outlined in the Credit Agreement and receiving at least $75 million in net proceeds from the offering.

The Second Amendment requires that 100% of the net proceeds from any Qualifying Debt Offering or equity offering must still be used to prepay amounts outstanding under the Credit Agreement. The change lies in how this impacts the borrowing base and available credit.

For net proceeds received from Qualified Debt Offerings or equity offerings between the amendment date and August 15, 2010, the borrowing base and revolving commitment amounts will only be reduced by 50% of those proceeds. After August 15, 2010, the reduction reverts to 100%.