Axesstel Secures $7 Million Financing From Silicon Valley Bank
Axesstel, a provider of fixed wireless voice and broadband access solutions to the worldwide telecommunications market, has secured a $7 million revolving line of credit with Silicon Valley Bank. The accounts receivable financing facility replaced an existing facility and is being used to fund the company’s short-term working capital needs, but at significantly lower interest rates. The effective interest at current market rates on borrowings under the new Silicon Valley Bank facility are between 6% and 7% per annum, compared to interest rates ranging from 16% to 24% under the company’s prior facility.
Patrick Gray, chief financial officer of Axesstel, said, “An important goal for 2012 was to use the improvement in our operating performance to reduce our cost of borrowing and further improve profitability. We are particularly pleased to have restructured our financing facility with a leading banking institution like Silicon Valley Bank, and to have done it without the issuance of any warrants or dilution to our stockholders.”
“We are excited to expand our relationship with Axesstel by providing the line of credit to finance the company’s working capital needs,” said Frederick “Buzz” Kreppel, senior relationship manager for Silicon Valley Bank. “We look forward to helping the team with continued success.”
The new credit facility provides for a working capital-based revolving line of credit where Silicon Valley Bank, in its discretion, will make advances in the amount of up to 80% of the value of eligible accounts receivable and eligible purchase orders for inventory in transit to a customer. Interest on each advance is calculated on the basis of Silicon Valley Bank’s prime rate plus a specified margin multiplied by the face amount of the eligible account receivable or purchase order. The specified margin is 1% for eligible accounts receivable and 1.4% for eligible purchase orders. However, if the company’s EBITDA for any trailing six month period falls below $1 million, the specified margins increase to 3% and 3.2%, respectively. The credit facility has a term of one year.
Advances under the financing facility are secured by a lien on substantially all of the company’s assets.