Cloud services provider Fusion acquired privately-held MegaPath Holding.
Based in Pleasanton, CA, MegaPath provides a fully-integrated suite of cloud services, including unified communications as a service (UCaaS), cloud computing, security, SD-WAN and cloud connectivity. The transaction is valued at under 5.0x pro forma adjusted EBITDA including anticipated cost synergies realized within 12 months of closing.
Total consideration in the transaction is $71.5 million. Up to $10 million of the consideration is payable at Fusion’s election in unregistered shares of Fusion common stock priced at $5.78 per share. Fusion intends to fund the cash portion of the consideration via borrowings under its first lien senior secured credit facility, $62 million of which is currently held in escrow for this acquisition. The transaction is expected to close within the next 90 days, subject to receipt of certain regulatory approvals and other customary closing conditions.
According to a related 8-K filing, the first lien and credit facility, closed on May 4, 2018, consists of term loans in an aggregate principal amount of $555 million. The facility is composed of an aggregate principal amount of $45 million and $510 million, respectively, and a revolving facility in an aggregate principal amount of $40 million. Wilmington Trust served as administrative agent.
Fusion simultaneously entered into a second lien credit and guaranty agreement comprised of a term loan in the aggregate principal amount of $85 million. Wilmington Trust was administrative agent for this transaction, too.
Goldman Sachs Lending Partners, Morgan Stanley Senior Funding and MUFG Union Bank served as joint lead arrangers and joint bookrunners, and Goldman Sachs served as syndication agent for each of the credit facilities.
The proceeds of the term loans have been used, in part, to refinance all of the existing indebtedness of Fusion and its subsidiaries, including the recently acquired Birch.