Fabrinet enters credit agreement, borrows $60.94 million term loan

By Sarah Lizee

Olympia, Wash., Sept. 12 – Fabrinet Co., Ltd. entered into a credit facility agreement on Aug. 20 with Bank of Ayudhya PCL, providing for a facility of 110 million baht and $160,937,500, according to an 8-K filing with the Securities and Exchange Commission.

The facility may be, among other things, an overdraft facility, short term loans against promissory notes, a letter of guarantee facility, a term loan facility and foreign exchange facilities.

The bank may approve any request for extension of credit under the facility agreement and may increase or decrease any facility amount in its discretion.

The borrower’s obligations under the facility were guaranteed by the company and are secured by real property owned by the borrower in Thailand.

On Sept. 3, the company borrowed $60,937,500 as a term loan due June 30, 2024 under the credit agreement.

Interest is Libor plus 135 bps and is repayable in quarterly installments of $3,046,875, commencing on Sept. 30.

The proceeds, together with cash on hand, were used to repay outstanding debt under a credit agreement dated as of May 22, 2014.

While the term loan is outstanding, the borrower is required to maintain a loan to value of the mortgaged real property ratio of not greater than 65%. If the loan to value ratio is not maintained, the borrower will be required to provide additional security or prepay a portion of the term loan in order to restore the required ratio.

Under the terms of the guarantee, the company is required to maintain a debt service coverage ratio of at least 1.25 times and a debt to equity ratio less than or equal to 1. Further, in the case of any payment of a dividend by the company, its debt service coverage ratio must be at least 1.5 times.

The Grand Cayman-based company provides optical packaging and precision optical, electro-mechanical and electronic manufacturing services to original equipment manufacturers of optics.

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