Business Context and Reporting Period
Company: Kimball Electronics, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: December 20, 2024
Event: Entry into an Amended and Restated Credit Agreement and termination of a prior credit facility.
Key Financial Metrics and Debt Structure
This filing details a restructuring of the Company's debt facilities rather than reporting operational financial results (revenue, profit, or cash flow) for a specific period.
- New Term Loan Facility: $100 million aggregate commitment; maturity date December 20, 2029. The Company borrowed the full $100 million upon execution.
- Revolving Credit Facility: $300 million commitment; maturity date May 4, 2027. Includes an accordion feature to increase capacity by an additional $150 million (total $450 million) subject to lender consent.
- Interest Rates:
- Term Benchmark (USD): SOFR + 0.10% + Spread (100.0 to 175.0 basis points).
- Term Benchmark (EUR): EURIBOR + Spread (100.0 to 175.0 basis points).
- Alternate Base Rate (ABR): Highest of Prime, NYFRB + 0.5%, or Adjusted Term SOFR + 1.0% + Spread (0.0 to 75.0 basis points).
- Commitment Fee: 10.0 to 25.0 basis points per annum on the unused portion, based on leverage ratio.
Material Changes Versus Prior Period
The Company replaced two existing facilities with a single Restated Credit Agreement:
- Primary Credit Facility (May 4, 2022): Amended and restated.
- Secondary Credit Facility (Feb 3, 2023): A 364-day multi-currency revolving facility (originally $50 million, increased to $100 million) was terminated and repaid in full. This facility was originally scheduled to mature on January 3, 2025.
- Structural Change: Introduction of a new term loan component with quarterly repayments beginning March 31, 2025.
Guidance, Outlook, and Covenants
Use of Proceeds: Refinancing existing indebtedness, paying off the Secondary Credit Facility, working capital, and general corporate purposes.
Financial Covenants (Unchanged from prior facility):
- Net Leverage Ratio: Consolidated total indebtedness minus unencumbered U.S. cash (in excess of $15 million) to adjusted consolidated EBITDA must not exceed 3.0 to 1.0.
- Exception: For four quarters following a material permitted acquisition, the ratio may not exceed 3.5 to 1.0.
- Interest Coverage Ratio: Consolidated EBITDA to cash interest expense must not be less than 3.5 to 1.0 for any four consecutive fiscal quarters.
Risks and Contingencies: The filing does not disclose new operational risks but notes that interest rates and fees are variable based on the Company's leverage ratio.
Investor Verification Checklist
- Verify the exact amount of unencumbered U.S. cash on hand to assess the current Net Leverage Ratio against the 3.0x covenant.
- Confirm the Company's adjusted consolidated EBITDA for the most recent four fiscal quarters to ensure compliance with the 3.5x interest coverage ratio.
- Review the full text of Exhibit 10.1 (Amended and Restated Credit Agreement) for specific definitions of "material permitted acquisition" and "adjusted consolidated EBITDA."
- Monitor the Company's ability to service the new term loan repayments starting March 31, 2025.