Digi International, a global provider of business and mission-critical Internet of Things (IoT) products, services and solutions, expanded and refinanced its senior secured revolving credit facility, increasing total borrowing capacity to $350 million.
The expanded facility replaces Digi’s existing $250 million revolving credit facility and provides an increased accordion feature allowing for additional borrowing capacity of the greater of $130 million or 100% of trailing twelve month adjusted EBITDA. Combined with the accordion feature, Digi has access to total potential borrowing capacity of up to $480 million, plus an unlimited incremental amount subject to a pro forma total net leverage ratio not to exceed 2.50x.
The new facility matures on Aug. 27, 2031. The new facility also features improved pricing, with SOFR margins ranging from 125 to 262.5 basis points based on Digi’s net leverage ratio, compared to a range of 135 to 310 basis points under the existing facility.
“This expanded facility reflects the confidence our banking partners have in Digi’s business and our continued ability to generate strong cash flows,” Jamie Loch, executive vice president, chief financial officer and treasurer of Digi International, said. “The increased capacity and improved terms provide us with greater financial flexibility to support our strategic growth initiatives, both organically and through acquisitions, while also reducing our cost of borrowing. We remain focused on disciplined capital allocation and delivering long-term value for our shareholders.”
The new facility also increases the maximum total net leverage ratio covenant from 3.0x to 3.50x, providing additional flexibility to pursue strategic acquisitions, with an acquisition holiday provision of 0.50x for four fiscal quarters following a qualifying acquisition. The minimum interest coverage ratio remains unchanged at 3.00x.
Subject to the terms of the new facility, Digi may use borrowings for working capital, capital expenditures, restricted payments, acquisitions and other general corporate purposes.
BMO Bank serves as administrative agent for the facility and collateral agent. BMO Capital Markets and Bank of America serve as joint bookrunners, BMO Capital Markets, Bank of America and MUFG Bank as joint lead arrangers.
