Kemet Corporation (KEM) NEC TOKIN Joint Venture Call March 12, 2012 4:30 PM ET Executives William Lowe – EVP and CFO Per-Olof – CEO Analysts Ritu – Bank of America Sherri Scribner – Deutsche Bank Hamed Khorsand – BWS Financial Presentation Operator
Before we begin, we would like to advise you that all statements that address expectations or projections about the future are forward-looking statements. Some of these statements include words such as expects, anticipates, plans, intends, projects and indicates.Although they reflect our current expectations, these statements are not guarantees of future performance, but involve a number of risks, uncertainties and assumptions. Please refer to our 10-Ks, 10-Qs and recent registration statements, filings for additional information on risks and uncertainties. And now, with that, I’ll turn the call over to Per. Per? Per-Olof Thank you, Bill, and most of you good afternoon. For Bill, good morning. We are excited to be able to share with you transforming piece in this for our company. Today is certainly the most dramatic change in history of our company and that is the goal to say that even the electronics component solutions industry may sit up and take notice. We are presenting today a road map (inaudible). KEMET and NEC TOKIN will as a result from probably its one of the most exciting solution companies in the world. KEMET founded as chemical and metallurgical laboratory in Cleveland, Ohio in 1919, we will have traveled from being mostly the U. S. centered company we are an international organization to truly becoming a global enterprise with significant operations in virtually every corner of the world, now even in Japan. For me, ever since I joined KEMET, I have felt that without a real presence in Japan, or maybe even more importantly, without a Japanese know-how and technology, we cannot truly hold ourselves forward. This strategy will alter the course of our combined enterprise for years to come and for sure for the better. The long-term opportunities for our people and business growth have opened up immensely for all KEMET and NEC TOKIN employees and the future opportunities for all our stakeholders, customers and investors will be at a new and higher plateau. Simply put, our target revenue for the combined enterprise we project it to almost double from KEMET’s current level upon the exercise of the third and final option periods and we are targeting $300 million to $400 million of EBITDA, excuse me, excuse me – per annum by fiscal ‘16. Again, as a combined entity, once integration is fully consonated.
The transaction has changed overtime and it’s designed this way to ensure that we take considered and well thrown our approaches and steps to the proposed integration in order to fully diminish of the untold opportunities that this presents. And of course, fully understand how we both NEC TOKIN and KEMET together can become one company with a truly global mindset.We’re all coming to this partnership with the willingness to learn and to grow together. This following to deliver outstanding customer experiences to all of our customers wherever that you call home. While the CapEx is subject to customer regulatory review, it comprises three major steps. First, we will pay $50 million in exchange for 34% economic interest in NEC TOKIN or NT, while old 51% of the voting common stock creating a joint venture. Our payment of $50 million is expected to be applied against NT’s incurred debt. Thereafter, it is our expectation that we will make a second $50 million payment in August 2014, in exchange for increased economic interest in NT and stepping out for economic ownership to 49% while maintaining 51% of the voting common stock. The value of the third and final payment will depend upon on the operating results of NT at the time and will rabate some six times multiple of EBITDA on the trailing 12 months performance plus the first $100 million that KEMET has already paid for the first 49% of ownership of $250 dollars whichever is greater. Read the rest of this transcript for free on seekingalpha.com