Emcore Corp, the semiconductor-based components and satellite solar panel developer, has amended the terms of its credit facility with Wells Fargo in response to the flooding of the company’s primary contract manufacturer in Thailand.
The amendments…
Emcore Corp, the semiconductor-based components and satellite solar panel developer, has amended the terms of its credit facility with Wells Fargo in response to the flooding of the company’s primary contract manufacturer in Thailand.
The amendments consist of increasing the potential borrowing base by up to US$10m by adding new assets, such as its machinery and equipment, in the borrowing base calculation, temporarily raising the interest rate on borrowings under the credit facility and reducing the minimum liquidity requirement by US$4m. The maximum potential borrowing, however, remains at US$35m.
Emcore stated that the terms of the facility would revert back to those originally agreed when the debt was first secured in November 2010 either at the end of the 2012 or when it receives the expected US$30m of insurance proceeds connected to Thai flooding incident.
Emcore revealed in late October 2011 that the severe flooding that had affected large swathes of Thailand, including the capital Bangkok, had infiltrated the offices and manufacturing floor space of its primary contract manufacturer’s Thai facility. The areas used to manufacture Emcore’s fiber optic products and its process and test equipment were submerged in several feet deep flood water for more than a month. As a result, the manufacturing infrastructure that supports approximately 50% of its fiber optics segment revenue was damaged.
Emcore stated that it expects to rebuild the production capacity for its cable television business by the end of March 2012 and the production capacity of its telecom production lines before the end of May. In the meantime, the company has secured agreements from both Wells Fargo and its key contract manufacturing partner in order to maintain its liquidity position until its receives the proceeds from its insurances claims.