Emcore Corp, the semiconductor-based components and subsystems and solar panel developer, has agreed a US$35m revolving credit facility with Wells Fargo. Proceeds are to be used for working capital requirements.
The facility pays an interest rate of…
Emcore Corp, the semiconductor-based components and subsystems and solar panel developer, has agreed a US$35m revolving credit facility with Wells Fargo. Proceeds are to be used for working capital requirements.
The facility pays an interest rate of 300bp over Libor, payable each month in arrears, and matures in November 2013. The loan is secured by substantially all of the company’s assets located in the United States and is also guaranteed by certain subsidiaries.
On securing the revolver, Emcore borrowed approximately US$5.62m in order to repay the entire US$5.2m outstanding under its previous US$14m loan agreement with Bank of America. The company also has a US$23m equity financing agreement with the Commerce Court Small Cap Value Fund which gives it the option to sell up to US$23m of registered common shares until October 2011.
Mark Weinswig, Emcore’s CFO, stated: “We are pleased to have executed a significant increase in our credit facility. This credit facility, combined with our existing cash position and improved operating performance over the past year, ensures that we have the financial capability required to support our strategic plan.”
Over the past couple of years, Emcore has undertaken an extensive restructuring strategy in order to address its mounting losses. The company reported an operating loss of US$138.2m for 2009 with revenue falling by US$63m year-on-year to US$176.4m.
Its business is split between developing fibre optic components and subsystems for satellite and terrestrial networks and solar photovoltaic technology for satellite solar panels. As part of its turnaround plan, Emcore sought to sell a majority stake in its fibre optic unit and at the beginning of 2010 entered into a share purchase agreement with Chinese investment company Tangshan Caofeidian Investment Corporation (TCIC) to sell 60% of the business for approximately US$27.8m in cash with a further US$27m of additional funding to be invested in the spun off fibre optic JV after closing.
However, in June 2010 the pair cancelled the agreement after the Committee on Foreign Investment in the United States (CFIUS) expressed regulatory concerns about the transaction. The two companies subsequently stated that they continue to pursue alternative means of cooperation, including separating the photovoltaic and fibre optics businesses to become pure plays.
Customers for its solar technology include Space Systems Loral, Orbital Sciences, EADS Astrium and Thales Alenia Space and the company claims to have more than 50% of the commercial satellite market.
The debt transaction is Weinswig’s first major deal since joining Emcore as its new chief financial officer in mid-October. In late October, Emcore regained compliance with Nasdaq’s US$1.00 minimum bid price requirement having been informed at the end of September that it breached the stock exchange’s rules.
