SIGMATRON INTERNATIONAL, INC. (NASDAQ:SGMA) Files An 8-K Entry into a Material Definitive AgreementITEM 1.01.Entry into a Material Definitive Agreement.
On Friday, March 31, 2017, SigmaTron International, Inc. (the “Company”) entered into a Loan and Security Agreement (the “Agreement”) with U.S. Bank National Association (“USB”), to which USB has agreed to provide the Company with a revolving credit facility of up to $35,000,000 (the “Facility”). The Facility replaced the Company’s senior secured revolving credit facility (the “Prior Facility”) with Wells Fargo Bank, National Association (“Wells Fargo”), which had a credit limit of up to $30,000,000.
The Facility is collateralized by substantially all of the assets of the Company (excluding real estate assets, inventory located outside of the United States that is ashore and not aboard a vessel and certain specified factored accounts). The Facility allows the Company to choose among interest rates at which it may borrow funds: USB’s announced prime rate plus zero percent or LIBOR plus one and one half percent. Interest is paid either monthly (in the case of a loan for which the chosen interest rate is based on USB’s prime rate) or the LIBOR period (1, 2 or 3 months) chosen by the Company. Under the Facility, the Company may borrow up to the lesser of (i) $35,000,000 or (ii) an amount equal to a percentage of the eligible account receivable borrowing base plus a percentage of the inventory borrowing base (collectively, “Borrowing Base”). Effective upon the initial borrowing under the Facility on March 31, 2017, there was an approximately $22,500,000 outstanding balance and $8,800,000 of unused availability under the Facility. Under the Agreement, the Company is required to be in compliance with a financial covenant. At March 31, 2017, the Company was in compliance with its financial covenant.
In connection with entering into the Agreement and establishing the Facility, on March 31, 2017, the Company entered into a Third Amendment to Third Amended and Restated Credit Agreement (the “Amendment”) entered into as of October 31, 2014, with Wells Fargo Bank, National Association, which Amendment served to remove the Prior Facility from the Third Amended and Restated Credit Agreement (as amended, the “Wells Fargo Credit Agreement”) between the Company and Wells Fargo. In connection with the removal of the Prior Facility, certain (but not all) of the covenants in the Wells Fargo Credit Agreement were removed and Wells Fargo released its liens on the Company’s personal property assets that were related to the Prior Facility. Other than as set forth above and as it relates to the following sentence, the remainder of the material terms of the Wells Fargo Credit Agreement remain unchanged. In connection with the Amendment, the Company entered into modifications of its mortgages with Wells Fargo on the Company’s properties in Elk Grove Village, Illinois and Elgin, Illinois with the purpose of cross-collateralizing those mortgage loans.
ITEM 1.02.Termination of a Material Definitive Agreement.
The primary purpose and use of the Company’s initial borrowing under the Facility discussed in response to Item 1.01 above was to pay off the Company’s outstanding obligations under the Prior Facility. In connection therewith, Wells Fargo terminated that certain Fifth Amended and Restated Revolving Line of Credit Note made by the Company and delivered to Wells Fargo on January 25, 2016.
About SIGMATRON INTERNATIONAL, INC. (NASDAQ:SGMA)
SigmaTron International, Inc. is a provider of electronic manufacturing service (EMS), which includes printed circuit board assemblies, and assembled (box-build) electronic products. The Company also provides services to its customers, including automatic and manual assembly and testing of products; material sourcing and procurement; manufacturing and test engineering support, and assistance in obtaining product approval from governmental and other regulatory bodies. The Company provides manufacturing and assembly services ranging from the assembly of individual components to the assembly and testing of box-build electronic products. Its technologies and services include manufacturing and testing services, design services, supply chain management, and warehousing and distribution. The Company’s products are sold in various industries, including appliance, consumer electronics, gaming, fitness, industrial electronics, medical/life sciences, semiconductor and telecommunications. SIGMATRON INTERNATIONAL, INC. (NASDAQ:SGMA) Recent Trading Information
SIGMATRON INTERNATIONAL, INC. (NASDAQ:SGMA) closed its last trading session up +0.14 at 5.03 with 21,776 shares trading hands.