19 November 2010

Emcore switches from $14m Bank of America credit facility to $35m Wells Fargo credit facility

Emcore Corp of Albuquerque, NM, USA, which makes components and subsystems for the broadband, fiber-optic, and solar power markets, says that it has terminated its existing loan agreement with Bank of America (a $14m revolving credit facility) and instead established an asset-based revolving credit facility with Wells Fargo that provides for borrowings up to $35m for working capital requirements, letters of credit and other general corporate purposes.

The credit facility is subject to certain financial covenants and a borrowing base formula and matures in November 2013. It bears interest at a rate per annum equal to the daily three-month LIBOR rate for the applicable interest period plus 3%. The loan is secured by substantially all of the firm’s assets located in the USA and is guaranteed by certain subsidiaries. The loan agreement contains customary representations and warranties, and affirmative and negative covenants.

Additional information can be found in a current report on Form 8-K to be filed with the US Securities and Exchange Commission (SEC).

“We are pleased to have executed a significant increase in our credit facility,” says chief financial officer Mark Weinswig (who was appointed on 12 October). “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,” he adds.

During third-quarter 2010, Emcore’s cash, cash equivalents, available-for-sale securities, and current restricted cash fell from $19m to about $16m. Working capital totaled $33.1m.

On 6 October, Emcore said that it had regained compliance with a NASDAQ rule to file its Form 10-Q report for third-quarter 2010 with the SEC. Subsequently, on 26 October, the firm said that it had also regained compliance with another NASDAQ rule by maintaining the closing bid price of its common stock equal to or above $1 per share for a minimum of 10 consecutive trading days.

See related items:

Emcore revenue shrinks 3% as it concludes accounting review

Tags: Emcore

Visit: www.emcore.com

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