KEMET Announces Amendment to Senior Notes
GREENVILLE, S.C., August 25, 2008 - KEMET Corporation today announced that it has entered into a second amendment with the holders of its 6.66% Senior Notes. The second amendment extends the reduced consolidated minimum net worth required to be in compliance with the terms of the Senior Notes through September 30, 2008.
As a result of an impairment charge reported in the Company's financial results for the quarter ended June 30, 2008, the Company would not have been in compliance with the consolidated minimum net worth covenant contained in the Senior Notes, which currently have an outstanding principal amount of $40.0 million. The Company entered into an amendment with the holders of the Senior Notes on July 30, 2008, which lowered the required minimum consolidated net worth through August 31, 2008. The Company has been, and is currently, in compliance with such covenant.
The Company is exploring various alternatives to replace the Senior Notes.
While the Company cannot provide any assurances, it currently believes that based upon the nature of its ongoing discussions with third parties that it will be successful in obtaining the necessary funds to replace the Senior Notes on or before September 30, 2008.
If the Company is not successful in obtaining new funds to replace the Senior Notes, or is not otherwise able to restructure, replace, or obtain an additional waiver of the consolidated minimum net worth covenant beyond September 30, 2008, the holders would be able to declare the Senior Notes due and payable. This would also cause the Company to be in default under its existing agreements with UniCredit, relating to EUR 96.8 million (approximately $143 million) of outstanding indebtedness. Further, a
failure by the Company to either repay the Senior Notes or the UniCredit facility when due, or the absence of a recission of such repayment requirement by the holders of the Senior Notes and UniCredit, respectively, within thirty days, would allow the holders of the Company's outstanding Convertible Senior Notes due 2026 to declare those Notes due and payable and require repayment of such Notes. The Company currently has $175 million of outstanding Convertible Senior Notes. The Company does not currently have the ability to repay the Senior Notes, the UniCredit facilities or its Convertible Senior Notes if such indebtedness is declared to be due and payable prior to its respective stated maturity. A failure by the Company to repay its debt when due and payable would have a material adverse effect on the Company.
KEMET Corporation applies world-class service and quality to deliver industry-leading, high-performance capacitance solutions to its customers around the world. KEMET offers the world's most complete line of surface-mount and through-hole capacitor technologies across tantalum, ceramic, film, aluminum, electrolytic, and paper dielectrics. KEMET's common stock is listed on The New York Stock Exchange under the symbol KEM.
Additional information about KEMET can be found at www.kemet.com.
Contact: William M. Lowe, Jr.
Executive Vice President and
Chief Financial Officer
864-963-6484
billlowe@kemet.com
Dean W. Dimke
Director of Corporate and Investor Communications
954-766-2806
deandimke@kemet.com
