KMG Chemicals, Inc. (NYSE:KMG) Files An 8-K Entry into a Material Definitive Agreement

KMG Chemicals, Inc. (NYSE:KMG) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01Entry into a Material Definitive Agreement.

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On December 19, 2017, KMG Chemicals, Inc. (the “Company”) entered into a First Amendment to Credit Agreement (the“Amendment”), by and among the Company, the other borrower parties referred to therein, and KeyBank National Association, as administrative agent (the “Agent”). The Amendment amends that certain Credit Agreement dated as of June 15, 2017 (the “Credit Agreement”), by among the Company, as borrower, the Agent, as agent, the lenders referred to therein, as lenders, KeyBanc Capital Markets Inc., HSBC Securities (USA) Inc., and JPMorgan Chase Bank, N.A., as joint lead arrangers and joint bookrunners, and ING Capital LLC, as documentation agent.

The Amendment reduces the interest rate margins applicable to borrowings under term loans and revolving loans made under the Credit Agreement. Under the Amendment, the $356 million currently outstanding under our existing term loan now bears interest at a varying rate of LIBOR plus a margin based on net funded debt to adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”), as described in the table below.

Term Loan – Ratio of Net Funded Debt to Adjusted EBITDA

Margin

Greater than 2.50 to 1.0

2.75

%

Less than or equal to 2.50 to 1.0

2.50

%

Prior to the date of the Amendment, our existing term loan bore interest at a rate of LIBOR plus 4.00%. Following the Amendment, it now bears interest at a rate of LIBOR plus 2.75%.

In addition, under the Amendment revolving loans bear interest at a varying rate of LIBOR plus a margin based on net funded debt to adjusted EBITDA, as described in the table below.

Revolving Loans – Ratio of Net Funded Debt to Adjusted EBITDA

Margin

Greater than 4.25 to 1.0

2.75

%

Greater than 3.75 to 1.0, but less than or equal to 4.25 to 1.0

2.50

%

Less than 3.75 to 1.0

2.25

%

Prior to the Amendment, revolving loans bore interest at a rate of LIBOR plus 3.00%. Following the Amendment, revolving loans bear interest at a rate of LIBOR plus 2.25%. There are currently no outstanding revolving loans under the Credit Agreement. TheAmendment reduces the fee on the unused amount of commitments under the revolving loan facility from 0.5% to 0.375%.

The description of the Amendment is qualified in its entirety by reference to the full text of the Amendment, a copy of which is attached as Exhibit 10.1 hereto and incorporated herein by reference.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The disclosure set forth above in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

Item 9.01Financial Statements and Exhibits.


KMG CHEMICALS INC Exhibit
EX-10.1 2 kmg-ex101_51.htm EX-10.1 kmg-ex101_51.htm Exhibit 10.1 Execution Version First AMENDMENT TO CREDIT AGREEMENT THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is entered into as of December 19,…
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About KMG Chemicals, Inc. (NYSE:KMG)

KMG Chemicals, Inc. manufactures, formulates and globally distributes specialty chemicals. The Company operates businesses selling electronic chemicals, industrial wood treating chemicals, and industrial valve lubricants and sealants. The Company operates through two segments: Electronic chemicals and Other chemicals. The Company operates through its subsidiaries, KMG Electronic Chemicals, Inc. (KMG EC), KMG-Bernuth, Inc. (KMG Bernuth) and KMG Val-Tex, LLC (Val-Tex). The Company’s Electronic chemicals business sells high purity and ultra-purity wet process chemicals primarily to the semiconductor industry. The Company’s Other chemicals segment includes its industrial lubricants business and wood treating chemicals business. The Company’s products sulfuric, phosphoric, nitric and hydrofluoric acids, ammonium hydroxide, hydrogen peroxide, isopropyl alcohol, other specialty organic solvents and various blends of chemicals.

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