TeleCommunication Systems Closes $80 Million With SVB, Others
Monday, July 09, 2012
TeleCommunication Systems, Inc. (TCS), a provider in highly reliable and secure mobile communication technology, announced it has acquired privately held microDATA GIS, Inc., a provider of Next Generation 9-1-1 (NG9-1-1) software and solutions.
The aggregate acquisition consideration is approximately $37 million, comprised of $20 million in cash at closing, plus $14 million in promissory notes and performance-based earn-out opportunities. TCS is financing the cash portion with an updated bank term loan arrangement.
TCS also closed the syndication of a new secured credit facility for up to $80 million, with a consortium of lenders administered by Silicon Valley Bank, a financial partner to technology and life science companies of all sizes worldwide. The facility lending group also includes M&T Bank, and, with this financing, GE Capital Bank has joined TCS' senior lending group. The new term debt interest rate of 4.0% is lower than the loan it replaces.
A new $45 million secured term loan facility subsumed TCS' $19 million term loan balance on June 30, 2012 and funded the cash portion of the microDATA acquisition. In addition, the facility includes continuation of TCS' $35 million revolving credit line to provide working capital for general corporate purposes, supplementing the company's more than $50 million of cash and marketable securities.
Tom Brandt, TCS senior vice present and CFO, commented: "Our company's new credit facilities enable flexibility to execute on our corporate objectives. The support we have received from the lending community reflects their confidence in our business model, the strength of our balance sheet and the recognition of our management's prudent outlook for the management of cash flow. Our company's convertible debt is due in about two and a half years, and our company is aware that some equity investors are concerned that refinancing of that debt might have an adverse effect on our equity security holders. Our company believes that during that period, the market will better understand the value of our company, which is entirely focused on secure, highly reliable, wireless communication technology that addresses the needs of major enterprise networks, including those of state, local and federal operations. We are also mindful that the 'sum of the parts' enterprise value illustrated in our investor relations materials suggest that equity investors do not currently discern that value."