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Frutarom Industries (FRUT)

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Thursday 11 January, 2018

Frutarom Industries

Entering into Loan Agreements

RNS Number : 6600B
Frutarom Industries Limited
11 January 2018
 

Below is the immediate report submitted today to the Israeli Securities Authority ("ISA") and the Tel-Aviv Stock Exchange through the ISA's electronic submission system in accordance with the Securities Regulations (Periodic and Immediate Reports), 1970.

 

Frutarom Industries Ltd.

("Frutarom")

Registration No.:  52-004280-5

The securities of Frutarom Industries Ltd. are listed for trading on the Tel-Aviv Stock Exchange

Name:  Frutarom

25 HaShaish St., P.O.B. 10067, Haifa 2611001

Tel:  +972-4-846 2401, Fax:  +972-4-872 2517, www.frutarom.com

Email:   tmirsky@frutarom.com

 

January 11, 2018

 

 

Israeli Securities Authority

Tel Aviv Stock Exchange Ltd.

http://www.isa.gov.il/

http://www.tase.co.il/

 

Dear Sir/Madam,

 

Subject: Entering into Loan Agreements  

In accordance with Regulation 36(a) of the Securities Regulations (Periodic and Immediate Statements), 5730-1970, Frutarom is pleased to hereby announce having entered into loan agreements with Israeli and foreign banking corporations (the "Lenders") via Frutarom Ltd., a fully-owned subsidiary (the "Borrower") on January 11, 2018 for the extending of loans totaling USD 235 million (respectively: the "Loan Agreements" and the "Loans") for the purpose of financing the merger transaction with Enzymotec Ltd.[1], of which the main terms are as follows:

1.    The Loans shall be for a period of five years beginning January 11, 2018 (the "Period") and bear annual interest of LIBOR plus a weighted annual spread of 1.52% (whereby in some of the Loan Agreements the interest spread is based on Frutarom's leverage ratio), payable in consecutive quarterly installments. Half of the principal of the Loans shall be paid starting 12 months after receiving the Loans and over the course of 16 consecutive quarters, with the balance payable at the end of the Period, and all according to the amortization schedule set out in each of the Loan Agreements.

2.    As security on its obligations toward the Lenders, Frutarom has undertaken to meet the following financial covenants which are  identical to the existing financial covenants in Frutarom's other loan agreements: (a) Frutarom's equity according to its financial statements will not at any time fall below USD 375 million; (b) Frutarom's equity according to its financial statements will equal no less than the value of 25% of its total assets; and (c) The ratio of Frutarom's total financial liabilities net of cash to its operating profit on a pro-forma basis equivalent from operating activities plus depreciation and amortization ("EBITDA") will not exceed 4, whereby the calculation of EBITDA shall be done on a pro-forma basis and net of nonrecurring expenses. The examination of the financial covenants specified above in this paragraph shall be according to Frutarom's annual and quarterly consolidated financial statements. As of the date of this report, Frutarom is in compliance with the financial covenants specified above.

3.    In addition to the financial covenants specified in paragraph 2 above, Frutarom has subjected itself to further restrictions as customary in agreements of this type, including in regard to dividend distributions and creating any security interest over its assets without obtaining the Lenders' consent, except for a number of exceptions set out in the Loan Agreements.

4.    Subject to Frutarom complying with all of the financial covenants specified in paragraph 2 above, and as long as no event of default occurs that would grant the Lenders the right to demand immediate repayment of the Loans as specified in paragraph 5 below, Frutarom shall be entitled to pay its shareholders dividends subject to the provisions of the Companies' Law, 5759-1999 and applicable regulation, in the amounts specified as follows: (1) up to 50% of the retained earnings accumulated until December 31, 2011 as this figure appears in Frutarom's 2011 balance sheet; and (2) up to 50% of Frutarom's annual income in any calendar year as this figure appears in Frutarom's annual financial statement concerning the same calendar year in which these profits were accumulated.  

5.    The Loan Agreements include grounds for demanding immediate repayment as customary in agreements of this type, including in cases of cross default with regard to the Frutarom Group, breach of covenants and representations  by the Borrower in accordance with the Loan Agreements, insolvency and liquidation, merger or change of structure ending with the Borrower not being the surviving entity,  direct or indirect change of control of the Borrower (except for exceptions as specified in the Loan Agreements), a halt in business, or a major change in business activity, as well as a deterioration in Frutarom Group's business, operations or assets and the Borrower's ability to meet its payments on the Loans taking into account the resources Frutarom Group has at its disposal.

6.    The Borrower shall be entitled to prepay the Loans, in whole or in part, in accordance with the conditions specified in the Loan Agreements.

 

 

Sincerely yours,

Eden Senay Tagania, Adv.

Legal Counsel

Frutarom Industries Ltd.



[1]     See Frutarom's reports on the merger transaction dated August 1, August 4, August 24, September 19, October 29, December 12 and December 26, 2017, which are hereby included by way of reference.


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