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SigmaTron International Inc. (NASDAQ:SGMA), a manufacturer of printed circuit boards, has entered into amended credit agreements with JPMorgan Chase (NYSE:JPM) Bank, N.A., and other financial institutions, as disclosed in a recent 8-K filing with the Securities and Exchange Commission.
On Monday, the company announced amendments to its existing credit arrangements, which include waivers for noncompliance with certain covenants as of August 19, 2024. These covenants relate to the Fixed Charge Coverage Ratio and the Total Debt to EBITDA Ratio.
The amendments modify the minimum Fixed Charge Coverage Ratio and adjust the Total Debt to EBITDA Ratio, with new thresholds extending into 2025. Additionally, the definition of EBITDA has been updated to allow for certain adjustments, including non-cash foreign currency losses and cash restructuring charges.
SigmaTron has also agreed to pursue a Replacement Transaction, with a deadline set for September 30, 2025, unless it achieves a Total Debt to EBITDA Ratio of less than or equal to 4.25:1.0 by the end of August 2025.
As part of the agreement with JPMorgan Chase Bank, SigmaTron's revolving commitment has been reduced from $70 million to $55 million, and the company is required to pay a cash amendment fee and monthly ticking fees until certain financial ratios are met or exceeded.
In addition to these financial adjustments, SigmaTron has agreed to issue warrants to purchase shares of its common stock, which will not be registered under the Securities Act of 1933 and will be issued in reliance upon exemptions provided therein.
In other recent news, SigmaTron International has announced significant changes in its executive leadership. The company has reported the upcoming retirement of Executive Vice President and Assistant Secretary Greg A. Fairhead, scheduled for August 31, 2024. The reasons for Fairhead's retirement and plans to address the vacancy have not been detailed.
Concurrently, SigmaTron has appointed John P. Sheehan, currently serving as the company's President, as a Class I Director. Sheehan's tenure in this role will extend until the 2024 annual meeting of stockholders.
As an employee-director, Sheehan is not eligible for additional cash compensation or equity awards under the company's non-employee director compensation arrangements. These recent developments underline SigmaTron's commitment to maintaining a strong leadership structure.
InvestingPro Insights
As SigmaTron International Inc. (NASDAQ:SGMA) navigates its amended credit agreements, investors may find value in considering the company's current financial metrics. According to real-time data from InvestingPro, SigmaTron has a market capitalization of $20.66 million, indicating its size within the market. The company's Price to Earnings (P/E) ratio stands at 18.24, which aligns with industry standards, but the adjusted P/E ratio over the last twelve months as of Q3 2024 is significantly lower at 3.37, suggesting potential undervaluation relative to earnings.
One of the key InvestingPro Tips is that SigmaTron is trading at a low Price to Book multiple of 0.3, which can be attractive to value investors seeking assets priced below their book value. Another tip to note is that SigmaTron has been profitable over the last twelve months, a positive sign for potential investors considering the company's financial health.
For those interested in a more in-depth analysis, InvestingPro offers additional tips on SigmaTron, providing a comprehensive view of the company's financial performance and stock behavior. With these insights, investors can make more informed decisions aligned with their investment strategies. For further details, there are 10 additional InvestingPro Tips available for SigmaTron at https://www.investing.com/pro/SGMA.
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