KEMET Announces Agreement to Acquire NEC TOKIN
February 23 2017 - 7:00AM
KEMET Corporation (the “Company” or “KEMET”) (NYSE:KEM), a leading
global supplier of passive electronic components, announced today
that, through its wholly owned subsidiary, KEMET Electronics
Corporation (“KEC”), it has signed a definitive agreement and is
targeting a closing date on or about April 10, 2017 to complete the
acquisition of NEC TOKIN Corporation (“NEC TOKIN”) from NEC
Corporation (“NEC”). Upon closing, NEC TOKIN will change its
name to TOKIN Corporation and become a wholly-owned subsidiary of
KEMET.
To facilitate the acquisition, the Company also announced today
that NEC TOKIN has entered into an agreement to sell its EMD
division (Electromechanical Devices) to NTJ Holdings 1 Ltd., a
special purpose entity that is owned by funds managed or operated
by Japan Industrial Partners, Inc. for approximately JPY 48.2
billion or approximately $422 million, prior to adjustments for net
debt at closing and subject to customary post-closing
adjustments. The proceeds of this transaction, after fees and
taxes, will be used in part to repay the NEC intercompany debt
resulting in an essentially debt-free balance sheet of NEC TOKIN
once it is acquired by KEMET.
Under the terms of the definitive stock purchase agreement, KEC
will pay to NEC the amount of JPY 6.0 billion, or approximately
$52.5 million, plus one-half of the remaining amount which is
determined to be the excess amount of net cash proceeds from the
sale of the EMD business. NEC TOKIN will also use a portion
of the net cash proceeds from the sale of the EMD business to repay
in full the outstanding indebtedness of NEC TOKIN that is owed to
NEC, which is currently JPY 25.4 billion, or approximately $222.4
million. Based on current estimates, after all payments to
NEC (and net of taxes, fees and expenses), it will effectively
result in a net cash inflow to NEC TOKIN and the Company.
“We are pleased to bring this acquisition to completion in such
a positive manner. It has been a long road with hard work by
many of the KEMET and NEC TOKIN employees. We believe that
this combination of our technologies and products will position us
to return exponential value to our shareholders over the coming
fiscal years,” stated Per Loof, the Company’s Chief Executive
Officer. “In addition, our improved balance sheet position,
combined EBITDA, and leverage statistics should enable us to
refinance our existing debt at improved interest rates, resulting
in less cash interest expense and providing additional earnings per
share for our shareholders,” continued Loof.
Nomura Securities Co., Ltd acted as financial advisor to NEC
TOKIN on the sale of the Electromechanical Devices business
unit.
For details of the agreement between NEC and KEC, and the
agreement among NEC TOKIN, NTJ Holdings 1 Ltd. and Japan Industrial
Partners, please refer to the Company’s Form 8-K related to these
transactions.
About KEMET
The Company's common stock is listed on the NYSE under the
ticker symbol "KEM" (NYSE:KEM). At the Investor Relations
section of our web site at http://www.kemet.com/IR, users may
subscribe to KEMET news releases and find additional information
about our Company. KEMET offers our customers the broadest
selection of capacitor technologies in the industry, along with an
expanding range of electromechanical devices, electromagnetic
compatibility solutions and supercapacitors. Our vision is to
be the preferred supplier of electronic component solutions
demanding the highest standards of quality, delivery and service.
Additional information about KEMET can be found at
http://www.kemet.com.
CAUTIONARY STATEMENT ON FORWARD-LOOKING
STATEMENTS
Certain statements included herein contain forward-looking
statements within the meaning of federal securities laws about
KEMET Corporation’s (the “Company”) financial condition and results
of operations that are based on management’s current expectations,
estimates and projections about the markets, in which the Company
operates, as well as management’s beliefs and assumptions. Words
such as “expects,” “anticipates,” “believes,” “estimates,”
variations of such words and other similar expressions are intended
to identify such forward-looking statements. These statements are
not guarantees of future performance and involve certain risks,
uncertainties and assumptions, which are difficult to predict.
Therefore, actual outcomes and results may differ materially from
what is expressed or forecasted in, or implied by, such
forward-looking statements. Readers are cautioned not to place
undue reliance on these forward-looking statements, which reflect
management’s judgment only as of the date hereof. The Company
undertakes no obligation to update publicly any of these
forward-looking statements to reflect new information, future
events or otherwise.
Factors that may cause actual outcome and results to differ
materially from those expressed in, or implied by, these
forward-looking statements include, but are not necessarily limited
to the following:(i) adverse economic conditions could impact our
ability to realize operating plans if the demand for our products
declines, and such conditions could adversely affect our liquidity
and ability to continue to operate; (ii) continued net losses could
impact our ability to realize current operating plans and could
materially adversely affect our liquidity and our ability to
continue to operate; (iii) adverse economic conditions could cause
the write down of long-lived assets or goodwill; (iv) an increase
in the cost or a decrease in the availability of our principal or
single-sourced purchased raw materials; (v) changes in the
competitive environment; (vi) uncertainty of the timing of customer
product qualifications in heavily regulated industries; (vii)
economic, political, or regulatory changes in the countries in
which we operate; (viii) difficulties, delays or unexpected costs
in completing the restructuring plans; (ix) equity method
investment in NEC TOKIN exposes us to a variety of risks; (x)
acquisitions and other strategic transactions expose us to a
variety of risks; (xi) possible acquisition of NEC TOKIN may
not achieve all of the anticipated results (xii) our business could
be negatively impacted by increased regulatory scrutiny and
litigation; (xiii) the inability to attract, train and retain
effective employees and management; (xiv) the inability to develop
innovative products to maintain customer relationships and offset
potential price erosion in older products; (xv) exposure to claims
alleging product defects; (xvi) the impact of laws and regulations
that apply to our business, including those relating to
environmental matters; (xvii) the impact of international laws
relating to trade, export controls and foreign corrupt practices;
(xviii) changes impacting international trade and corporate tax
provisions related to the global manufacturing and sales of our
products may have an adverse effect on our financial condition and
results of operations; (xix) volatility of financial and credit
markets affecting our access to capital; (xx) the need to reduce
the total costs of our products to remain competitive; (xxi)
potential limitation on the use of net operating losses to offset
possible future taxable income; (xxii) restrictions in our debt
agreements that limit our flexibility in operating our business;
(xxiii) failure of our information technology systems to function
properly or our failure to control unauthorized access to our
systems may cause business disruptions; (xxiv) additional exercise
of the warrant by K Equity, LLC which could potentially result in
the existence of a significant stockholder who could seek to
influence our corporate decisions; and (xxv) fluctuation in
distributor sales could adversely affect our results of
operations.
Contact:
William M. Lowe, Jr.
Executive Vice President and
Chief Financial Officer
williamlowe@kemet.com
864-963-6484
Richard J. Vatinelle
Vice President and
Treasurer
richardvatinelle@kemet.com
954-766-2838
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