UPDATE 1-Entegris says to reduce size of credit facility

Mon May 3, 2010 6:24pm EDT

* Says does not expect changes to cash flow leverage ratio

* Says credit agreement continues to mature on Nov. 1 2011

May 3 (Reuters) - Chip equipment maker Entegris Inc (ENTG.O) said it has entered into discussions with Wells Fargo Bank to reduce the size of a revolving credit commitment amount to $60 million from $121.7 million.

The company said it does not expect significant changes to the cash flow leverage ratio or fixed charge coverage ratio covenants of the credit agreement, which would continue to be secured and would continue to mature on Nov. 1, 2011.

Entegris had outstanding borrowings under the revolving credit facility of $36.4 million as of April 3, 2010, with an additional $1.9 million undrawn on outstanding letters of credit, according to a regulatory filing.

The company expects to completely repay all outstanding amounts under the credit facility by the end of the third quarter of this year, it said in a statement.

"Based on current business trends, we no longer need such a large credit commitment and do not want to pay the fees associated with that level of commitment," Chief Financial Officer Gregory Graves said.

"We do not anticipate needing to borrow under the Credit Agreement after we have paid off our outstanding balances," he added.

Shares of the company fell as much as 8 percent to $6.19 in trading after the bell. They closed at $6.75 Monday on Nasdaq. (Reporting by Shrutika Verma in Bangalore; Editing by Jarshad Kakkrakandy)