PHOENIX, March 31, 2006 (PRIMEZONE) -- Suntron Corporation (Nasdaq:SUNN), a leading provider of integrated electronics manufacturing solutions, today announced that on March 30, 2006 Suntron completed the sale of its building and land in Sugar Land, Texas and the refinancing of its credit facility.
The company received net proceeds of approximately $16.8 million from the sale of its building and land in Sugar Land, Texas, which was used to repay a portion of its outstanding debt. Concurrent with the sale, the company entered into a seven-year operating lease agreement for approximately 50% of the building. This transaction allows Suntron to reduce its outstanding debt levels and right size its manufacturing footprint. Suntron also expects to benefit from eliminating future interest costs and the fixed overhead costs related to the portion of the building that was not utilized.
Concurrent with the sale, Suntron also completed a refinancing of its credit facility. The company entered into a new three-year, $50.0 million credit facility. Upon the closing of the refinancing, the outstanding principal balance on the new credit facility was approximately $24 million, with unused borrowing availability of approximately $18 million.
In addition, Suntron also entered into a $10 million secured subordinated note purchase agreement with Thayer Equity Investors IV, L.P. ("Thayer"), an affiliate of Suntron's majority stockholder. Thayer agreed to make additional secured subordinated loans of up to $5 million should the company fail to comply with the financial covenants in its new credit facility. Under the terms of the secured subordinated loan, the outstanding principal balance plus all accrued interest is due in May 2009.
In commenting on the refinancing, Paul Singh, Suntron's president and chief executive officer said, "The completion of these transactions provides a long-term solution to our capital structure by significantly reducing the outstanding debt of the company. It gives us the financial flexibility to continue to grow our business and provide our customers with the highest quality solutions. Our ability to refinance our indebtedness also demonstrates the confidence that our majority stockholder and lenders have in our operating strategy."
About Suntron Corporation
Suntron delivers complete manufacturing services and solutions to support the entire life cycle of complex products in the aerospace and defense, industrial, semiconductor capital equipment, networking and telecommunications, and medical markets. Headquartered in Phoenix, Arizona, Suntron operates seven full-service, manufacturing facilities and two quick-turn manufacturing facilities in North America. Suntron is involved in product design, engineering services, cable and harness production, printed circuit card assembly, box build, and large scale and complex system integration and test. The Company has approximately 1,730 employees and contract workers.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This release contains forward-looking statements that relate to future events or performance. These statements reflect Suntron's current expectations, and Suntron does not undertake to update or revise these forward-looking statements, even if experience or future changes make it clear that any projected results expressed or implied in this or other company statements will not be realized. Furthermore, readers are cautioned that these statements involve risks and uncertainties, many of which are beyond Suntron's control, which could cause actual results to differ materially from the forward-looking statements. These risks and uncertainties include, but are not limited to, general economic conditions and specific conditions in the electronics industry, including the aerospace and semiconductor capital equipment market segments of the electronics industry; Suntron's dependence upon a small number of customers; Suntron's ability to improve capacity utilization and reduce fixed costs in response to decreases in demand, Suntron's ability to attract new customers and retain existing customers; cash availability and liquidity; changes in debt levels and interest rates; changes or cancellations in customer orders; the risks inherent with predicting cash flows, revenue and earnings outcomes as well as other factors identified as "Factors That May Affect Future Results" or otherwise described in Suntron's filings with the Securities and Exchange Commission from time to time.
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