Avid Technology Worldwide entered into a $105 million financing agreement with Cerberus Business Finance as collateral and administrative agent.

“The new debt facility further strengthens our liquidity position and supports the execution of the last leg of our transformation, including the efficiency program,” said John Frederick, chief financial and administrative officer of Avid. “We continue to expect positive adjusted free cash flow generation in 2016, although we do anticipate using cash in the first half of the year as we execute on the cost initiatives.

The five-year, $105 million senior secured credit facility consists of a $100 million term loan and an undrawn $5 million revolver. Proceeds from the term loan will be used to replace the company’s existing $35 million revolving credit facility, finance the company’s efficiency program and other transformation initiatives and provide operating flexibility throughout the remainder of the transformation in this period of heightened market volatility.

The company estimates that after paying for both debt issuance costs and the efficiency program, the new financing will provide approximately $70 million of available liquidity, about half of which replaces the existing revolving credit facility with the remainder providing incremental liquidity to strengthen the company’s balance sheet.

The credit facility matures in February 2021, but is subject to an earlier maturity date in May 2020 if the company has not refinanced its senior unsecured convertible notes by that time. The credit facility accrues interest at LIBOR plus 6.75%, with a 100 basis point floor, a 1% annual anniversary, excess cash flow sweep requirements and customary maintenance financial covenants, including maximum total leverage. The term loan is subject to a 1.25% mandatory principle amortization per quarter.

According to an 8-K filing, concurrently with the entry into the financing agreement, on February 26, 2016 the company terminated its existing credit agreement, dated June 22, 2015, among the company and certain of its subsidiaries, as borrowers with KeyBank National Association, as administrative agent and the other lender parties thereto, and repaid all outstanding borrowings in the amount of $30.1 million under such agreement. There were no penalties paid by the company in connection with this termination.