Celerity to pay down all notes, bank debt as part of IPO; Kinetic Systems to obtain new loan

By Peter Heap

New York, June 10 - Celerity Group, Inc. said it will repay all its outstanding debt including both notes and bank loans as part of its initial public offering.

And sister company Kinetic Systems, Inc., which will be separated ahead of the public sale, has a commitment for a new $150 million senior credit facility.

In total Celerity will repay $319.6 million of borrowings, according to a filing with the Securities and Exchange Commission. The debt will be made up of:

--$125 million term loan due Dec. 31, 2005 plus a $685,000 prepayment premium. Interest on the loan is at Libor plus 400 basis points;

$95 million revolver due Feb. 28, 2006 with $45.3 million outstanding plus a $328,000 prepayment premium. The loan is at Libor plus 350 basis points;

--$70 million 12.5% senior notes due Aug. 25, 2006 plus a prepayment premium of $4.965 million;

--$50 million 11.75% junior notes due Aug. 30, 2006 plus a prepayment premium of $9.4 million;

--$13.638 million of other debt plus a prepayment premium of $320,000.

Celerity will also pay accrued interest. Of the debt to be repaid, $13.1 million will be at maturity in December 2002.

To finance the debt repayment, Celerity will use $169.6 million of its IPO proceeds and a $150 million note to be paid to the company by Kinetic Systems.

Remaining proceeds from the IPO will be used for general corporate purposes and working capital requirements.

Celerity, a Milpitas, Calif. maker of semiconductor manufacturing equipment, filed with the SEC to offer $300 million of common stock via joint bookrunners Deutsche Bank Securities Inc. at Morgan Stanley.

The filing also noted that Kinetic Systems has a commitment for a new $150 million senior credit facility from Bank of Nova Scotia. Proceeds from the facility will be used to pay the separation note to Celerity. The commitment letter expires on Aug. 31, 2002.

Kinetic Systems provides turnkey process systems and operating services for electronics, biotechnology and pharmaceutical manufacturers.

The two companies were acquired as a unit from United States Filter Corp., then owned by Vivendi SA, in a management buyout in 2000.

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