Entegris repays $25 million loan debt, sells $550 million notes in Q4

By Devika Patel

Knoxville, Tenn., Feb. 6 – Entegris Inc. successfully conducted a $550 million sale of notes in the fourth quarter, the proceeds of which were used to pay off $360 million of existing notes.

The new notes lowered the company’s interest rate and also gave Entegris more financial flexibility through an investment-grade style covenant package.

“During the quarter, we took advantage of the favorable debt market to complete a successful $550 million notes offering to refinance $360 million of existing notes,” treasurer, executive vice president and chief financial officer Gregory Graves said on the company’s fourth quarter and year ended Dec. 31, 2017 earnings conference call on Tuesday.

“The offering not only lowered our interest rate from 6% to 4 5/8% but allowed us to raise $170 million of incremental capital on favorable terms to use for potential accretive acquisitions.

“In addition, the new debt has an investment-grade style covenant package that significantly increases our financial flexibility,” Graves said.

The company repaid $25 million of its term loan during the fourth quarter, bringing the total term loan debt repaid during the year to $100 million.

“During the year, we also repaid $100 million of our term loan, continuing our cadence of repaying $25 million per quarter,” president and chief executive officer Bertrand Loy said on the call.

Entegris generated EBITDA of $357 million during the year. Adjusted EBITDA for the quarter was $97 million.

The company increased free cash flow 40% over last year to $200 million during the year. Free cash flow for the quarter was $60 million.

As of Dec. 31, 2017, total long-term debt was $674 million and net leverage was 0.1x.

As of Dec. 31, 2017, the company’s cash balance was $625 million.

On Nov. 2, Entegris priced an upsized $550 million of 8.25-year senior notes (Ba3/BB-) at par to yield 4 5/8%.

The issue was enlarged from the $450 million originally announced on Nov. 1.

The issue came on the tight side of price talk envisioning a yield in the 4¾% area.

That Rule 144A and Regulation S for life deal was brought to market via left lead bookrunner Goldman Sachs & Co., with BofA Merrill Lynch and Morgan Stanley & Co. LLC also serving as bookrunners.

The notes have three years of call protection, first becoming callable at par plus 75% of the coupon, then par plus 50% of the coupon, par plus 25% of the coupon, and then finally at just par.

The company, a Billerica, Mass.-based provider of specialty chemicals and advanced materials solutions for the microelectronics industry, used the new deal proceeds to redeem its $360 million of outstanding 6% notes due 2022 at a price of 104.5 plus accrued interest, to pay fees and expenses related to the redemption of the 2022 notes and for general corporate purposes.

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