SMTC CORPORATION (NASDAQ:SMTX) Files An 8-K Entry into a Material Definitive Agreement

SMTC CORPORATION (NASDAQ:SMTX) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.

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On June 29, 2018, SMTC Corporation (the “Company”), SMTC Manufacturing Corporation of California, SMTC Mex Holdings, Inc., ZF Array Technology, Incorporated, and HTM Holdings, Inc., as US Borrowers, SMTC Manufacturing Corporation of Canada, as Canadian Borrower, the financial institutions which are now or which hereafter become a party to the Loan Agreement and PNC Bank, National Association, (“PNC”) as agent for the lenders entered into the Fourteenth Amendment (the “Fourteenth Amendment”) to the Revolving Credit and Security Agreement, dated September 14, 2011 (as subsequently amended, the “Loan Agreement”).

The Fourteenth Amendment removes the Equipment Loan limit restriction of $2,000,000 on the Equipment purchased to be located in Mexico. This makes the maximum $3,000,000 available under the Equipment Loan available to the US Borrowers for equipment located in Mexico. The terms of the Equipment Loan are otherwise unchanged.

The Fourteenth Amendment establishes that proceeds the Company may raise via an offering of subscription rights to its stockholders(the “Rights Offering”) must be deposited in either a lockbox account, dominion account of such “blocked account” established at a bank or banks (each such bank, a “Blocked Account Bank”) to an arrangement with such Blocked Account Bank as may be selected by the Company and be acceptable to PNC or (ii) depository accounts (“Depository Accounts”) established at PNC for the deposit of such proceeds. The Company, PNC and each Blocked Account Bank shall enter into a deposit account control agreement in form and substance satisfactory to PNC directing such Blocked Account Bank to transfer such funds so deposited to PNC. All funds deposited in such Blocked Accounts shall immediately become the property of PNC. Notwithstanding anything to the contrary contained herein, the Company may hold an amount not to exceed $13,500,000 in the aggregate at any time in an investment account maintained with PNC so long as upon the earlier of (A) one hundred and eighty (180) days following the Permitted Rights Offering or (B) the date that an Event of Default has occurred, such amount shall be (i) applied to the Obligations in such order as PNC may determine (the “Rights Offering-Funds Payment”), or (ii) used to (x) finance the purchase price of an acquisition or (y) to finance expenditures to acquire, upgrade or maintain physical assets of one or more Borrowers or make improvements to new or existing properties owned by the Company, in each case acceptable to PNC; provided, that, to the extent the Rights Offering-Funded Payment is a repayment of Revolving Advances, an amount equal to such amount may be reborrowed as a Revolving Advance to a US Borrower so long as the Borrowers have satisfied the borrowing conditions set forth in Loan Agreement, use such funds to finance the acquisition as contemplated and required in foregoing clause (ii), and, after giving pro forma effect to such Revolving Advance, the Borrowers shall have Undrawn Availability of at least $5,000,000.

The foregoing description of the Fourteenth Amendment is qualified in its entirety by reference to the full text of the Fourteenth Amendment, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference herein. Capitalized terms not otherwise defined herein have the meaning given to them in the Fourteenth Amendment.

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

(a) The disclosure provided under Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03(a) as if fully set forth herein.

Item 9.01 Financial Statements and Exhibits.

EX-10.1 2 exh_101.htm EXHIBIT 10.1 Exhibit 10.1   FOURTEENTH AMENDMENT TO REVOLVING CREDIT AND SECURITY AGREEMENT   This Fourteenth Amendment to Revolving Credit and Security Agreement (the “Amendment”) is made as of this 29 day of June,…
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SMTC Corporation (SMTC) is a provider of electronics manufacturing services (EMS). The Company’s manufacturing services include product design and sustaining engineering services, printed circuit board assembly (PCBA), production, enclosure fabrication, systems integration and testing services, configuration to order, build to order and direct order fulfillment. Its geographic segments include the United States, Mexico and China. SMTC offers integrated contract manufacturing services to global original equipment manufacturers and technology companies primarily within the industrial, networking and computing, communications and medical market sectors. SMTC offers over three vertically integrated manufacturing streams, such as enclosures and precision metal fabrication products, PCBA products and larger-scale systems. For each of these streams, SMTC provides a range of manufacturing services, from assembly, test to system level test and end customer order fulfillment.

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