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IQE

6 February 2019

5N Plus secures new US$25m unsecured term loan

Specialty metal and chemical products firm 5N Plus Inc of Montreal, Québec, Canada has closed a US$25m unsecured subordinated term loan with Investissement Québec.

5N Plus provides purified metals such as bismuth, gallium, germanium, indium, selenium and tellurium, and also produces related II-VI semiconducting compounds such as cadmium telluride (CdTe), cadmium sulphide (CdS) and indium antimonide (InSb) as precursors for the growth of crystals for solar, LED and eco-friendly materials applications.

Launched in 2016, the company’s strategic plan 5N21 identified the specialty semiconductor sector as a key growth area, aiming to grow the revenue contribution from this sector to 15% of total revenue by 2021. This investment should be completed by mid-2019 and is included in the overall investment envelope envisioned under 5N21 which aims to deliver adjusted EBITDA of US$45m along with 17% return on capital employed by 2021.

The firm says that, since the launch of 5N21, it has been delivering results in line with the defined targets. During this time, 5N Plus has continued to undergo a transformation that is taking it from manufacturing and sales of specialty metals and chemicals to that of engineered materials, yielding margin expansion and improved return on capital employed.

As 5N Plus nears the half-way point of its strategic plan, it is expected that more emphasis will be placed on the development of its growth initiatives along with further investment in efficiency gains from its core businesses. It is hence expected that proceeds from the unsecured term loan will be used to support these programs along with repayment of the balance of the unsecured convertible debentures issued by the firm in 2014; which will mature on 30 June. The new loan has a five-year term and will be disbursed in two tranches: the first of US$5m on 6 February and a second of US$20m by no later than 29 March. The new term loan will bear interest equivalent to the 5-year US dollar swap rate plus a margin of 4.19% (which currently equates to about 6.80%).

“The new term loan and our recently renewed senior revolving credit facility constitute a well-balanced portfolio of financing,” believes chief financial officer Richard Perron. “With this backbone, our company is ideally positioned to fund its future ambitions defined by 5N21 while addressing both flexibility and cost effectiveness,” he adds. “The new financing structure avoids dilution potential for our shareholders, mainly as it pertains to convertible debt instruments,” Perron continues “As we continue to transform our company and deliver tangible value, we are elated to have the support of Investissement Québec, an important institution in the local business community.”

See related item:

5N Plus doubles production capacity in semiconductor engineered materials

5N Plus secures new US$79m syndicated credit facility

5N Plus consolidating operations

Tags:  5N Plus

Visit:  www.5nplus.com

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