- New facility is expected to improve free cash flow by approximately $ 10 million and non-GAAP net income per share by approximately $ 0.22 in 2021
- The JPMorgan-managed credit facility consists of a $ 180 million term loan and an unfunded revolving credit facility of $ 70 million
- The refinancing will reduce Avid’s debt financed by approximately US $ 21 million and the effective cash interest rate by 450 basis points from 7.75% to 3.25%
- The terms of the new facility provide significant incremental flexibility to support their strategy and growth plans
BURLINGTON, Mass., Jan. 5, 2021 (GLOBE NEWSWIRE) – Avid® (NASDAQ: AVID), a technology leader that powers the media and entertainment industries, announced today that it has signed a new five-year contract for $ 180 million US $ 70 million term loan and revolving credit facility with JPMorgan Chase Bank, NA and a consortium of banks. The proceeds from the new term loan, as well as the available cash on hand, were used to repay outstanding loans of $ 201 million under the company’s existing credit facility at Cerberus Business Finance, LLC, which was then terminated. The new revolving credit facility, which has not been drawn at the time of closing, may be used for working capital, other general corporate purposes, and for other permitted purposes.
Jeff Rosica, Chief Executive Officer and President, said, “The continued growth in Avid software subscriptions and our improvement in business performance and free cash flow profile in recent times have enabled us to have a cost-effective capital structure. With the completion of the refinancing, we believe we are well positioned to execute our strategy and further improve our profitability and free cash flow generation. “
“We are excited about the successful execution of our new credit facility,” said Ken Gayron, executive vice president and chief financial officer. “We have used recent successes in our business to significantly reduce our debt costs, further strengthen our balance sheet, extend our maturities, and provide additional financial flexibility and liquidity. We have seen very strong demand for this transaction, which gives confidence Our customers’ creditors have considered Avid’s current and long-term prospects. The new facility further improves our capital structure by building on our June 2020 retirement of our convertible bonds and reduces our outstanding debt by $ 21 million based on our previous interest rate and With the initial effective interest rate of 3.25%, we expect our annual interest expense to be approximately $ 10 million lower in 2021 than in 2020. “
The new term loan has an initial rate of LIBOR plus an applicable margin of 3.00% with a LIBOR floor of 0.25%. The applicable margin for the term loan and the revolving credit facility is between 2.00% and 3.25% depending on the leverage. The loan agreement contains two financial covenants: (i) the obligation to maintain a net leverage ratio of no more than 4.00 to 1.00 specified in the loan agreement until June 30, 2021 with subsequent withdrawals, and (ii) one Requirement for compliance with a fixed credit-covenant ratio within the meaning of the credit agreement of at least 1.20 to 1.00. Both the term loan and the revolving credit facility mature on January 5, 2026.
JPMorgan Chase Bank, NA, Citizens Bank, NA, PNC Capital Markets LLC, Silicon Valley Bank, and Truist Securities, Inc. acted as joint bookrunners and joint lead arrangers for the new credit facility, with JPMorgan Chase Bank, NA acting as the administrator and Citizens Bank NA, PNC Bank, National Association, Silicon Valley Bank, and Truist Bank serving as co-syndication agents.
Certain information in this press release contains forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements that relate to our future financial performance or position, results of operations, business strategy, plans and goals of management for future operations, and other statements that are not historical facts. You can identify forward-looking statements by using forward-looking words such as “may”, “will”, “anticipate”, “expect”, “believe”, “estimate”, “intend”, “plan”, “plan” should “,” search ”or other comparable terms.
Readers of this press release should understand that these forward-looking statements are not guarantees of performance or results. Forward-looking statements provide our current expectations and beliefs about future events and are subject to risks, uncertainties and factors relating to our business and operations, all of which are difficult to predict and could cause our actual results to differ materially from the expectations expressed or implied by such forward-looking statements.
These risks, uncertainties, and factors include, but are not limited to: risks related to the impact of the coronavirus (COVID-19) outbreak on our business, suppliers, consumers, customers and employees; our liquidity; our ability to execute our strategic plan including our cost saving strategies and to meet customer needs; our ability to retain and hire key personnel; our ability to produce innovative products to respond to changing market demand, particularly in the media industry; our ability to successfully implement our product development plans; Competitive factors; History of losses; Fluctuations in sales based, among other things, on our performance and our risks in certain regions or markets; our greater indebtedness and ability to service it and meet its obligations; Restrictions in our credit facilities; our move to a subscription model and the associated impact on our earnings and our ability to predict future earnings; Fluctuations in subscription and maintenance renewal rates; extended sales cycles; Exchange rate fluctuations; seasonal factors; adverse changes in economic conditions; Deviations in our sales backlog and their realization; Risks related to the availability and prices of raw materials, including adverse effects from inflation, weather conditions, or health pandemics; Disruptions or inefficiencies in our supply chain and / or operations, including the COVID-19 outbreak; the costs, disruptions, and distractions of management’s attention due to the COVID-19 outbreak; the possibility of legal proceedings that conflict with our company; and other risks described in our reports filed from time to time with the US Securities and Exchange Commission. In addition, future legal, regulatory or other changes, including changes in tax law, as well as other economic, business and / or competitive factors, may affect the business. The above risks do not claim to be exhaustive. We caution readers not to place undue reliance on forward-looking statements in this press release, which speak only as of the date of this press release. We are not responsible for updating or revising any forward-looking statements except as required by law.
Avid offers the most open and efficient media platform that combines content creation with collaboration, protection, distribution and consumption of resources. Avid’s outstanding customer community leverages Avid’s comprehensive tools and workflow solutions to create, distribute, and monetize the world’s most watched, loved, and listened to media – from prestigious and award-winning movies to popular television shows, news shows, and sporting events in the Watch TV. and acclaimed music recordings and live concerts. Avid’s industry-leading solutions with the most flexible deployment and pricing options include Media Composer®, Pro Tools®, Avid NEXIS®, MediaCentral®, iNEWS®, AirSpeed®, Sibelius®, Avid VENUE ™, Avid FastServe® ™ and Maestro ™, and PlayMaker ™. For more information about Avid solutions and services, visit www.avid.com, connect with Avid on Facebook, Instagram, Twitter, YouTube, LinkedIn, or subscribe to Avid blogs.
© 2021 Avid Technology, Inc. All rights reserved. Avid, the Avid logo, Avid NEXIS, Avid FastServe, AirSpeed, iNews, Maestro, MediaCentral, Media Composer, NewsCutter, PlayMaker, Pro Tools, Avid VENUE, and Sibelius are trademarks or registered trademarks of Avid Technology, Inc. or its subsidiaries in the United States and / or other countries. All other trademarks are property of their respective owners. Product features, specifications, system requirements and availability are subject to change without notice.