Plexus' recapitalization plan includes $150 million in long-term debt

By Lisa Kerner

Charlotte, N.C., Feb. 26 - Plexus Corp.'s board of directors approved a financial recapitalization of the company in which Plexus will repurchase up to $200 million of its common stock.

To fund the share repurchase program, Plexus expects to use existing cash and new long-term debt of $150 million.

BMO Capital Markets is lead arranger for a committed, five-year senior unsecured term loan, with the interest based on a spread over Libor.

Plexus entered into accelerated share repurchase agreements with Morgan Stanley & Co. Inc. to repurchase $100 million of its common stock. The company planned to pay $100 million to Morgan Stanley on Tuesday, and Morgan Stanley intended to deliver some 2.2 million initial shares to the company on that same day.

The final number of shares to be repurchased will be based upon the volume-weighted average daily trading price of Plexus' common stock during the transaction period, which is expected to continue through June.

The remaining $100 million will be repurchased in the open market, and Plexus said it expects to complete these repurchases by the end of the year. The $200 million repurchase authorization replaces an existing authorization to repurchase up to $25 million in common stock.

"We believe that repurchasing Plexus stock at current market prices is an attractive use of our capital with the potential to create significant shareholder value," president and chief executive officer Dean Foate said in a company news release.

"We remain optimistic about achieving our long-term growth goals while delivering returns on invested capital in excess of our weighted average cost of capital," Foate added.

According to chief financial officer Ginger Jones, a moderate amount of debt at the current favorable interest rates "strikes the right balance for Plexus."

The Neenah, Wis., electronics products manufacturer believes the recapitalization will be accretive to diluted earnings per share for 2008, with accretion of approximately $0.01 in the second fiscal quarter, the news release stated.

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