Elcoteq (OMX: ELQAV) is unable to repay the remaining 48.5 million Euro on its revolving credit facility maturing today. The company said a month ago when it lowered its outlook that it expects five-year export financing revolving credit facility allowing the repayment of the facility expiring today to be granted by Magyar Export-Import Bank Zrt by today. Elcoteq now admits that an agreement has not been reached.
Few minutes before this news, Elcoteq announced it has signed a non-binding Term Sheet with California based private equity firm Platinum Equity with the aim of restructuring the Companys debt and strengthening balance sheet via additional equity issuance and debt funding. Should current revolving facility lenders and other main lender agree to restructure current debt, the aim is for Platinum to receive new shares amounting to under the 33 1/3% mandatory offer threshold and warranties, which if exercised in full, would take Platinum’s ownership portion ”substantially” higher.
Elcoteq says that Platinum Equity has requested the Revolving Credit Facility lenders not to accelerate the facility. The due diligence process is again supposed to take around 30 days. The companies are also negotiating about further debt financing amounting to up to 80 million Euros. Negotiations with Magyar Export-Import Bank Zrt are supposed to continue under this planned transaction with Platinum Equity.
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