KME SE
KME Seeking to Obtain Italian Government-Guaranteed Loan
Thu 11/05/2020 09:00 AM
Relevant Items:
Updated Tear Sheet
KME H1 Presentation
KME H1 Report
Intek H1 Report
2023 OM
Semi and finished copper products manufacturer KME is seeking to obtain a loan guaranteed by the Italian government through its credit export agency SACE, sources told Reorg. The size of the loan is still unclear. Continue reading for the EMEA Core Credit by Reorg team's update on KME, and request a trial for our coverage of thousands of other stressed and distressed credits.
The company previously announced that KME Mansfeld GmbH had acceded to the KME Group’s credit facility coordinated by Deutsche Bank which has been increased to €395 million from €375 million. KME Mansfeld tranche A bank consortium has been terminated and tranche B has been increased to €25 million. As of the second quarter, the letters of credit usage on the facilities totaled €453.1 million, above the capacity of the new structure of the facilities. The group said it will accommodate this mainly by optimizing working capital and cash.
The last 12 months breakdown of the group’s €2.369 billion of revenue is below, with Italy consolidated under Europe. According to the company’s 2023 notes offering memorandum, as of the end of September 2017, 31% of the business’ revenue came from Germany and 16% from Italy year to date. France and “other EU” made up 17% and 23.2% respectively. Figures quoted in the offering memorandum do not reflect the impact of MKM acquisition which had turnover of about €1.1 billion and brass and tubes business disposal which had turnover of about €540 million.
Under the Italian government’s April Liquidity Decree, medium-sized and large companies can ask export credit agency SACE to guarantee new bank loans if businesses refrain from approving dividend payments for a year. The government can guarantee up to 90% of the principal amount of the financing for companies that employ fewer than 5,000 people in Italy and have annual revenue lower than €1.5 billion. KME had 3,916 employees overall as of the second quarter end excluding around 500 employees at Trefimetaux Group.
The government can guarantee 80% of the principal amount of the financing for companies that employ more than 5,000 people in Italy or have annual revenue between €1.5 billion and €5 billion. It can guarantee 70% of the principal amount of the financing for companies which have annual revenue higher than €5 billion. SACE may also provide the guarantee through a simplified procedure to companies with annual revenue of less than €1.5 billion and fewer than 5,000 people employed in Italy - if those loans are below the €375 million threshold.
A number of companies, including Fiat-Chrysler, Impresa Pizzarotti, OVS, Safilo and Marcolin have benefited from the government-guaranteed loans, as reported.
KME is in discussions with its bank lenders to extend the maturity of its borrowing base facility, which is due in 2021, as reported. The company said it has received a positive response from three lenders already and hopes to finalize the agreement with other lenders in November.
During the latest call with investors, asked about potential asset sales, such as the Trefimetaux business, the company said that it is still exchanging information with interested parties and hopes to come to a conclusion in the next month. Management said that the company would evaluate the possibility of a bond buyback if a problem with a covenant would arise as result of this sale, adding that such a move would always depend on the liquidity available and at the time.
--Luca Rossi, Ben Kovacka
Updated Tear Sheet
KME H1 Presentation
KME H1 Report
Intek H1 Report
2023 OM
Semi and finished copper products manufacturer KME is seeking to obtain a loan guaranteed by the Italian government through its credit export agency SACE, sources told Reorg. The size of the loan is still unclear. Continue reading for the EMEA Core Credit by Reorg team's update on KME, and request a trial for our coverage of thousands of other stressed and distressed credits.
The company previously announced that KME Mansfeld GmbH had acceded to the KME Group’s credit facility coordinated by Deutsche Bank which has been increased to €395 million from €375 million. KME Mansfeld tranche A bank consortium has been terminated and tranche B has been increased to €25 million. As of the second quarter, the letters of credit usage on the facilities totaled €453.1 million, above the capacity of the new structure of the facilities. The group said it will accommodate this mainly by optimizing working capital and cash.
The last 12 months breakdown of the group’s €2.369 billion of revenue is below, with Italy consolidated under Europe. According to the company’s 2023 notes offering memorandum, as of the end of September 2017, 31% of the business’ revenue came from Germany and 16% from Italy year to date. France and “other EU” made up 17% and 23.2% respectively. Figures quoted in the offering memorandum do not reflect the impact of MKM acquisition which had turnover of about €1.1 billion and brass and tubes business disposal which had turnover of about €540 million.
Under the Italian government’s April Liquidity Decree, medium-sized and large companies can ask export credit agency SACE to guarantee new bank loans if businesses refrain from approving dividend payments for a year. The government can guarantee up to 90% of the principal amount of the financing for companies that employ fewer than 5,000 people in Italy and have annual revenue lower than €1.5 billion. KME had 3,916 employees overall as of the second quarter end excluding around 500 employees at Trefimetaux Group.
The government can guarantee 80% of the principal amount of the financing for companies that employ more than 5,000 people in Italy or have annual revenue between €1.5 billion and €5 billion. It can guarantee 70% of the principal amount of the financing for companies which have annual revenue higher than €5 billion. SACE may also provide the guarantee through a simplified procedure to companies with annual revenue of less than €1.5 billion and fewer than 5,000 people employed in Italy - if those loans are below the €375 million threshold.
A number of companies, including Fiat-Chrysler, Impresa Pizzarotti, OVS, Safilo and Marcolin have benefited from the government-guaranteed loans, as reported.
KME is in discussions with its bank lenders to extend the maturity of its borrowing base facility, which is due in 2021, as reported. The company said it has received a positive response from three lenders already and hopes to finalize the agreement with other lenders in November.
During the latest call with investors, asked about potential asset sales, such as the Trefimetaux business, the company said that it is still exchanging information with interested parties and hopes to come to a conclusion in the next month. Management said that the company would evaluate the possibility of a bond buyback if a problem with a covenant would arise as result of this sale, adding that such a move would always depend on the liquidity available and at the time.
--Luca Rossi, Ben Kovacka
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