MKS Instruments Completes Refinancing of Secured Term Loan A

Rhea-AI Summary

MKS Instruments, Inc. successfully completed the refinancing of its existing $744 million secured tranche A term loans using a portion of the proceeds of its $490 million incremental secured U.S. dollar tranche B term loans and €250 million incremental secured Euro tranche B term loans. The refinancing extended the maturity of the loans to 2029 and is expected to result in savings by reducing MKS’ weighted average cost of debt on the amount of debt refinanced by approximately 30 to 35 basis points based on current interest rates. The move adds flexibility, simplifies the capital structure, and is consistent with MKS' track record of proactively managing its balance sheet. JP Morgan acted as the sole lead arranger and sole bookrunner for the tranche A term loan refinancing.

Financial Analyst

The refinancing of MKS Instruments' existing debt, specifically the $744 million secured tranche A term loans, represents a strategic financial maneuver aimed at optimizing the company's capital structure. By replacing a portion of this debt with new tranche B term loans in both U.S. dollars and Euros, MKS has managed to extend the maturity of its obligations to 2029, which could alleviate short-term liquidity pressures and enhance financial flexibility.

From a financial perspective, the reduction in the weighted average cost of debt by approximately 30 to 35 basis points is a significant factor that could lead to interest expense savings. This is particularly relevant given the interest rate environment at the time of the refinancing. For MKS, which operates in the technology sector where investment in R&D and capital expenditure is crucial, such savings could be redirected towards growth initiatives or improving operational efficiencies.

Debt Market Analyst

The strong market demand for MKS Instruments' Term Loan B, as indicated by the company's CFO, suggests a positive market perception of the company's creditworthiness and operating model. This level of demand can influence the terms and pricing of the debt, potentially leading to more favorable conditions for MKS. The involvement of a leading financial institution like JP Morgan as sole lead arranger and bookrunner underscores the credibility of the transaction.

For stakeholders, the extended maturity and reduced interest rates could imply a vote of confidence in MKS' long-term financial health. However, it's essential to monitor the company's leverage ratios post-refinancing to ensure that the capital structure remains sustainable over time. An over-leveraged balance sheet could pose risks to the company's financial stability, especially if market conditions deteriorate.

Market Research Analyst

Within the broader context of the enabling technologies sector, MKS Instruments' proactive balance sheet management through this refinancing could provide a competitive edge. The ability to secure favorable terms reflects not only on the company's financial health but also on its strategic positioning within the industry. It is important to consider how this refinancing might impact MKS' ability to invest in new technologies or market expansion, as well as how it compares to industry norms in terms of debt structure and cost of capital.

The refinancing could signal to investors that MKS is well-positioned to navigate economic cycles and invest in opportunities that may arise, which is particularly relevant in a fast-evolving industry where technological advancements are rapid and capital-intensive.

ANDOVER, Mass., Jan. 22, 2024 (GLOBE NEWSWIRE) -- MKS Instruments, Inc. (NASDAQ: MKSI) (“MKS”), a global provider of enabling technologies that transform our world, announced today that it successfully completed the refinancing of its existing $744 million secured tranche A term loans using a portion of the proceeds of its $490 million incremental secured U.S. dollar tranche B term loans and €250 million incremental secured Euro tranche B term loans (collectively, the “Term Loan B”). As a result of the refinancing, the maturity of the refinanced loans has been extended to 2029, consistent with MKS’ existing secured tranche B term loans, and is expected to result in savings by reducing MKS’ weighted average cost of debt on the amount of debt refinanced by approximately 30 to 35 basis points based on current interest rates.

“This move adds flexibility, simplifies our capital structure, and is consistent with our longstanding track record of proactively managing our balance sheet,” said Seth H. Bagshaw, Executive Vice President and Chief Financial Officer. “We are pleased with the strong market demand for our Term Loan B reflecting the strength of our operating model and appreciate the partnership of our lenders in facilitating the transaction.”

JP Morgan acted as the sole lead arranger and sole bookrunner for the tranche A term loan refinancing.

About MKS Instruments
MKS Instruments enables technologies that transform our world. We deliver foundational technology solutions to leading edge semiconductor manufacturing, electronics and packaging, and specialty industrial applications. We apply our broad science and engineering capabilities to create instruments, subsystems, systems, process control solutions and specialty chemicals technology that improve process performance, optimize productivity and enable unique innovations for many of the world's leading technology and industrial companies. Our solutions are critical to addressing the challenges of miniaturization and complexity in advanced device manufacturing by enabling increased power, speed, feature enhancement, and optimized connectivity. Our solutions are also critical to addressing ever-increasing performance requirements across a wide array of specialty industrial applications. Additional information can be found at www.mks.com.

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
This press release contains a forward-looking statement within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27 of the Securities Act, and Section 21E of the Securities Exchange Act regarding the expected savings related to the refinancing by reduction of MKS’ weighted average cost of debt on the amount of debt refinanced. This statement is only a prediction based on current assumptions and expectations. Actual events or results, including changes in interest rates, may differ materially from those in the forward-looking statement set forth herein. Readers are referred to MKS' filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q for a discussion of these and other important risk factors concerning MKS and its operations. MKS is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

Company Contact:
David Ryzhik
Vice President, Investor Relations
Telephone: (978) 557-5180
Email: david.ryzhik@mksinst.com

FAQ

What is the recent announcement from MKS Instruments, Inc.?

MKS Instruments, Inc. announced the successful completion of the refinancing of its existing secured tranche A term loans using a portion of the proceeds of its incremental secured U.S. dollar and Euro tranche B term loans.

What is the expected impact of the refinancing on MKS Instruments, Inc.?

The refinancing is expected to result in savings by reducing MKS’ weighted average cost of debt on the amount of debt refinanced by approximately 30 to 35 basis points based on current interest rates.

Who facilitated the tranche A term loan refinancing for MKS Instruments, Inc.?

JP Morgan acted as the sole lead arranger and sole bookrunner for the tranche A term loan refinancing.