Source: Kemet news
FORT LAUDERDALE, Fla., Nov. 29, 2018 (GLOBE NEWSWIRE) — KEMET Corporation, a Delaware corporation (“KEMET” or the “Company”), a leading global supplier of passive electronic components, announced today that it has entered into a customer agreement which provides interest-free advance payments to KEMET totaling $30 million, which will be used to fund KEMET investments in increased capacity.
Together with a similar agreement entered into by the Company on September 4, 2018, the Company will be receiving interest-free customer advances of $66 million to increase its capacity for the manufacture of certain multi-layer ceramic capacitors requested by the customers. For each agreement, the customer has a right of first order regarding the use of the additional capacity funded by its advance. KEMET retains the title and ownership to all equipment purchased using the advance.
“We believe that these customer agreements on future capacity are an indication not only of the anticipated market growth and volume needs in the future, but a demonstration of the strength of the relationship that KEMET has with its customers. The expertise in our Ceramics business continues to be in large case size and focused on specialty products and not in the commodity phone or handset market,” stated Per Loof, the Company’s Chief Executive Officer. “The combination of these agreements assures a commitment of approximately 33% of our planned future capacity and sets us apart from our competition,” continued Loof.
For each agreement, the advance is paid in quarterly installments over an expected period of 18 – 24 months, with the amount of each installment based on the costs and expenses that have been incurred, or are expected to be incurred, by the Company in connection with the capacity expansion. Once the additional capacity is fully installed and available, the advance is repaid to the customer on a quarterly basis. Each quarterly repayment amount is determined by a calculation that generally takes into account the number of components purchased by the customer in such quarter in excess of its established based ordering rate and is capped at 1/40th of the total advance. Although the minimum repayment period is ten years (beginning with the initial repayment), if, based on the customer’s ordering rate, the advance has not been fully repaid by a specific date (for each agreement, such date being no less than 20 years after the contract execution date), then any remaining amounts of the advance are considered paid in full.