Daily News: March 13, 2018

BMO Harris Provides $22.25MM Refi Facility to CynergisTek


BMO Harris Bank issued a new $17.25 million term loan and a $5 million revolver for CynergisTek as part of the latter’s debt restructuring.

The restructuring included paying off the company’s Avidbank term loan and 75% of the amount due pursuant to promissory notes from the January 2017 acquisition of CynergisTek. Commensurate with this restructuring, Dr. Michael Hernandez resigned as COO of CynergisTek effective March 12, 2018 and will step down from the board of directors to pursue other opportunities.

In addition to the term loan and revolver, the transaction also included:

  • Repayment in full and cancellation of the current Avidbank term loan and line of credit
  • Repayment of $6.75 million of the amounts due under promissory notes to CynergisTek CEO Mac McMillan and Dr. Hernandez
  • Extension of the maturity of the remaining $2.25 million promissory note to McMillan
  • Modification of the earn-out provisions to guarantee Dr. Hernandez’s earn-out through a $3.75 million note issuance with a five year maturity earning interest at five percent
  • Reducing McMillan’s remaining earn-out potential to $1.2 million, tied to financial performance for the next three years, as set by the board of directors at the beginning of each year

“This new banking relationship will allow us to optimize our capital structure to align both our business and financial strategies, focusing on long term growth for the company,” said Paul Anthony, CFO of CynergisTek. “With BMO, we will have a partner who can bring added advisory services which will be essential as we execute on our strategic initiatives. We feel these initiatives will best serve the interest of the company and our shareholders.”

Mission Viejo, CA-based CynergisTek is a cybersecurity and information management consulting firm dedicated to serving the healthcare industry.