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| Vince Keenan |
Avnet has scored a new unsecured three-year, $350 million revolver with Banc of America Securities and ABN Amro to finance the company's growth during an anticipated up-cycle in the semi-conductor business. Avnet wants the new revolver to lock in short-term liquidity, said Vince Keenan, v.p. and director of investor relations for Avnet. According to Keenan, the company increased its revenues over a billion dollars in the last year and is expecting the company to continue growing. "We want to make sure that we have enough liquidity."
Keenan cited positive terms and market conditions together with the company's continued quarterly growth as factors that influenced Avnet's decision to move on the new credit. "This facility, along with a $350 million accounts receivable securitization program and another $350 million of cash on the balance sheet, provide ample liquidity to our growth going forward," he noted.
Last October, Avnet terminated its undrawn $350 million bank facility that was to mature in October 2004, due to a ratings downgrade by Moody's Investors Service, which would have triggered a springing lien under terms of the facility. Since the springing lien would have transformed Avnet's unsecured debt into secured debt and Avnet did not need the liquidity at the time, the company decided to terminate the facility, Keenan explained. "The covenants in this facility are less restrictive than those in the previous one," said Keenan. The current facility does not include a springing lien. B of A also led the previous facility.
Pricing is based on a grid tied to ratings and the amount drawn under the facility. Avnet has a Ba2 rating from Moody's and a BBB- rating from Standard & Poor's. "If you were to take today's credit rating we would be paying LIBOR plus 2%," Keenan noted. Avnet currently has a 42% debt-to-capital ratio.
A total of 13 banks participate in the facility, including co-documentation agents Credit Suisse First Boston, Scotia Capital and BNP Paribas. New members in the facility include BNP Paribas, Royal Bank of Canada, Key Bank, Dresdner Bank and Sumitomo Mitsui Banking Corp.