Announces Pricing of $175 Million Incremental Term Loan
London, Sep 27, 2018 AEST (ABN Newswire) - Speedcast International Limited (
ASX:SDA) (SPPDF:OTCMKTS) ("Speedcast"), the world's most trusted provider of remote communication and IT solutions, today announced it has successfully priced the US$175 million incremental term loan add-on (the "Incremental Term Loan") to its existing US$425 million US Term Loan B facility (due 2025) (the "Existing Term Loan"). The Incremental Term Loan and the Existing Term Loan will have the same terms, including interest margin, and will be priced at LIBOR plus 2.75% p.a., which is a 0.25% p.a. increase on the current interest margin under the Existing Term Loan.
"This incremental term loan add-on builds on Speedcast's strong relationships with institutional lenders in the US Term Loan B market." said Clive Cuthell, Chief Financial Officer, Speedcast. "The acquisition of Globecomm is a strong fit with Speedcast's strategy to consolidate our industry and build competitive advantages based on scale and capabilities. The incremental debt will be used to complete this synergistic acquisition and enhance our liquidity position."
Speedcast intends to use the proceeds from the Incremental Term Loan to fund the acquisition of Globecomm Systems Inc. for approximately US$135 million(see Note 1 below), to pay fees and transaction expenses and to repay a portion of the loans outstanding under its Revolving Credit Facility ("RCF"), enhancing Speedcast's liquidity position. The Incremental Term Loan will be borrowed on completion of the acquisition which is expected to occur in Q4 2018, subject to customary closing conditions, including regulatory approvals.
The following table sets out a summary of the key terms of Speedcast's 7 year Senior Secured Credit Facility on completion of the acquisition and the Incremental Term Loan:
----------------------------------------------------------------------Term DescriptionTerm Loan Facility ----------------------------------------------------------------------Facility Size US$600 million----------------------------------------------------------------------Term 7 years (due 2025)----------------------------------------------------------------------Interest Rate LIBOR plus 2.75% p.a.----------------------------------------------------------------------Amortisation of principal 1% p.a.----------------------------------------------------------------------Early repayment At Speedcast's option----------------------------------------------------------------------Financial covenant None----------------------------------------------------------------------Revolving Credit Facility ----------------------------------------------------------------------Facility Limit US$100 million----------------------------------------------------------------------Term 5 years (due 2023)----------------------------------------------------------------------Interest Rate LIBOR plus 2.50% p.a. (current rate subject to a grid which reduces when first lien net leverage(see Note 2 below) is < 3.0x) ----------------------------------------------------------------------Financial Covenant When RCF drawings are > 35% of the RCF Facility Limit, maximum first lien net leverage 4.0x----------------------------------------------------------------------
Speedcast has entered into interest rate swap agreements in respect of 75% of the Existing Term Loan to fix the interest rate payable on the term loans for a period of five years. On completion of the Incremental Term Loan, Speedcast intends to enter into similar arrangements to proactively manage its interest rate risk.
Credit Suisse acted as Sole Lead Arranger and Sole Bookrunner on the Incremental Term Loan.
Notes:
1 The estimated purchase price of US$135 million is net of proceeds from the sale and leaseback of Globecomm's Haupagge facility and other estimated purchase price adjustments.
2 Net leverage means the ratio of Net Debt to Consolidated EBITDA (as defined in the credit facility agreement, including the full twelve month pro forma impact of acquisitions and identified synergies).
About Speedcast International Ltd
Speedcast International Ltd (ASX:SDA) is the world's most trusted communications and IT services provider, delivering critical communications solutions to the Maritime, Energy, Mining, Media, Telecom, Cruise, NGO, Government, and Enterprise sectors. With more satellite capacity than any other provider, Speedcast enables faster, seamless pole-to-pole coverage from a global hybrid satellite, fiber, cellular, microwave, MPLS, and IP transport network with direct access to public cloud platforms. The company also integrates differentiated technology offerings that provide smarter ways to communicate and distribute content, manage network and remote operations, protect and secure investments, and improve the crew and guest experience. With a passionate customer focus and a strong safety culture, Speedcast serves more than 3,200 customers in over 140 countries. Learn more at www.speedcast.com.
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