Magnite reached an agreement in principle on pricing and syndication for a seven-year, $360 million senior secured term loan B and a five-year, $52.5 million senior secured revolving credit facility. Goldman Sachs led both facilities.
The facilities are subject to execution of definitive documentation and the closing of the previously announced acquisition of SpotX, which remains subject to regulatory approval and other customary closing conditions. Magnite intends to use the net proceeds of the term loan B plus the proceeds from its existing $400 million convertible notes due 2026 issued in March 2021 to pay the cash purchase price of the SpotX acquisition, fund related transaction fees and expenses, and provide excess cash for operations.
“The term loan B and revolver agreement in principle complete our financing for the pending SpotX acquisition announced on [Feb. 5],” David Day, CFO of Magnite, said. “We were pleased with the strong demand from banks and lenders and receptivity to Magnite as a first-time issuer. In addition, the $400 million we previously raised in convertible notes was in part used to reduce the amount of the term loan B by $200 million from the initial Goldman Sachs commitment of $560 million, which will significantly lower our annual cash interest obligations. Proceeds from the convertible notes allow us to further reduce equity dilution from the acquisition of SpotX by 1.6 million shares and the notes carry an effective conversion premium of 100% due the addition of the capped call. We believe the combination of convertible notes, term loan B and revolver, and equity reflect an attractive means of financing the SpotX acquisition and result in a balanced capital structure for Magnite going forward.”
Magnite received inaugural corporate ratings of B2 and B from Moody’s Investors Service and S&P Global Ratings, respectively, with a stable outlook from both agencies. The new capital structure will result in a blended cash interest rate of 2.9% when combining the term loan B and the convertible notes. The periodic interest rate of the term loan B is expected to be LIBOR (with a LIBOR floor of 0.75%) plus a 5% spread.
Goldman Sachs led the convertibles notes as well as the facilities and acted as M&A advisor in connection with the SpotX transaction.
