ESCO Technologies Inc. ESE recently amended and extended its credit agreement to boost its liquidity position in the near term. Following the news, shares of the company went up marginally (0.51%) during the regular trading session on the NYSE on Dec 23.
As per the new agreement, ESCO Technologies’ credit facility’s maturity date shifted to Dec 21, 2020 from May 13, 2017. Additionally, same as the prior agreement clause, the amended credit facility comprises a $450 million revolving line of credit, which can be raised by an additional $250 million. Apart from this, the amendment will trim down the outstanding borrowing rates and commitment fees of the facility.
A consortium of top financial institutions, comprising nine banks, is supporting ESCO Technologies’ new facility. This is led by JPMorgan Chase & Co. JPM as Administrative Agent.
ESCO Technologies has planned to use the proceeds from the facility for meeting corporate needs such as capital expenditure, working capital requirements and strategic acquisitions. At the end of fiscal 2015, the company had cash & cash equivalents of $39.4 million, total shareholders’ equity of $584.2 million and long-term debt of $30 million. With improved flexibility, ESCO Technologies can efficiently pursue larger projects, strategic buyouts and other growth initiatives.
Apart from this, we believe the improved liquidity will aid the company’s commitment of increasing the wealth of its shareholders through share-repurchase programs. During fiscal 2015, ESCO Technologies expended $18.2 million to repurchase outstanding shares worth 520,000 in an open market transaction. Going forward too, the company expects to continue with its share repurchase activity.Such moves enhance investors’ confidence in the stock.
ESCO Technologies currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same industry includes CUI Global, Inc. CUI and Franklin Electric Co., Inc. FELE carrying a Zacks Rank #2 (Buy).
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