SunTrust Bank served as administrative agent on a five-year, $175 million term loan, a $10 million delayed draw term loan facility and a $25 million revolving credit facility for Zix, a provider of e-mail security solutions.
Zix also secured a new $100 million convertible preferred equity investment from True Wind Capital and expanded its board of directors to eight members by appointing True Wind Founding Partner James H. Greene, Jr. and True Wind Principal Brandon Van Buren as directors.
These financial transactions happened concurrently with Zix closing its acquisition of AppRiver, a provider of cloud-based cybersecurity solutions, for $275 million in cash, subject to a customary working capital adjustment and reduction for outstanding AppRiver indebtedness, certain accrued items and transaction expenses.
“Today is a significant day for Zix and AppRiver employees, customers, partners, and shareholders, as we complete the acquisition of AppRiver and create one of the leading email and security solutions providers, particularly for the small and mid-size business market,” said David Wagner, Zix CEO. “Over the last three years we aligned our business with the growth drivers that are propelling our industry, especially our customers’ migration to the cloud, which is still in its early innings. This acquisition further strengthens that alignment by bolstering our security offerings, expanding our go-to-market channels, and providing a stronger cloud platform to drive even more value for our customers and partners. We’re excited to enter this new chapter of our value creation journey. We will focus on integrating the two businesses, accelerating our growth through channel partners and cross-selling, and increasing our profitability through cost synergies and improved attach rates.”
The annual recurring revenue (ARR) of the combined company (representing the projected future revenue to be generated over the ensuing 12-month period) is approximately $180 million at the time of closing. Zix is targeting ARR of approximately $200 million to $207 million for 2019, which represents an organic growth rate of approximately 11% to 15% year-over-year. Zix management is also expecting revenue of approximately $47 million to $50 million with a 24% adjusted EBITDA margin in the fourth quarter of 2019.
