Comtech Telecommunications entered into a new $550 million credit facility with a syndicate of lenders. The facility consists of a $300 million senior secured revolving loan facility and an accordion feature allowing the company to borrow up to an additional $250 million, plus additional amounts subject to pro forma covenant compliance.
According to a related 8-K filing, Citibank acted as administrative agent, issuing bank and swingline lender on the transaction.
The facility will be used for general corporate purposes, including support of the company’s growth strategies. Comtech’s prior credit facility was refinanced in full.
Other terms of the new facility include:
- A five year term, which expires in October 2023
- A $35 million letter of credit sublimit
- A swingline loan credit sublimit of $25 million
- Significant increase in balance sheet flexibility
- No scheduled payments of principal until maturity
- A maximum secured leverage ratio covenant of 3.75x, with no step downs
- A minimum interest expense coverage ratio covenant of 3.25x
- Reduced interest rates of approximately 25 basis points as compared to its prior facility based on the company’s secured leverage ratio as of July 31, 2018
- Elimination or relaxation of many restrictive covenants from Comtech’s prior facility
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Fred Kornberg, chairman and CEO of Comtech, said, “We are very pleased with our new credit facility which provides us significantly better terms and enhanced balance sheet flexibility. We thank our banking partners for supporting Comtech as we pursue our long-term business strategies.”
As of July 31, 2018, the company’s total debt outstanding under its prior facility was $168.7 million, its secured leverage ratio and leverage ratio were 2.19x and its interest expense coverage ratio was 10.3x. Deferred financing costs of approximately $3.2 million, primarily associated with the term loan portion of the company’s prior facility, will be expensed during the Comtech’s first quarter of fiscal 2019.
Comtech Telecommunications designs, develops, produces and markets products, systems and services for advanced communications solutions, with a diverse customer base in the global commercial and government communications markets.
