Model N refinanced its credit facility with Wells Fargo. The current facility includes a $50 million term loan and a $5 million revolving credit facility.
“Model N exceeded its revenue and profitability guidance for the second quarter of fiscal 2018 and posted our third straight quarter of positive adjusted EBITDA, with positive free cash flow of $4.7 million. In addition, I am excited to announce that we have refinanced our debt which will significantly reduce our interest payments and improve our cash flow,” said Zack Rinat, founder, chairman and CEO of Model N.
The proceeds from the new loan were used in part to pay off the amounts outstanding under the existing term loan agreement, which bore an interest rate of LIBOR plus 8.25% during the second quarter of fiscal 2018. Borrowing under the new credit agreement will bear interest, at the company’s selection, of either (i) the base rate plus a margin of 3.5% to 2.0% or (ii) a LIBOR plus a margin of 4.5% to 3.0%, with margin steps down based upon on the company’s leverage ratio. With this refinancing, Model N will have a 45% to 64% reduction in LIBOR margin.
Excluding any prepayment penalty, Model N anticipates the new loan to reduce its cash interest payment by approximately $0.8 million for the remainder of fiscal 2018. In Q3/18, company expects to incur a one-time charge of approximately $3.2 million in connection with the refinancing, of which approximately $1.7 million is non-cash unamortized discounts and deferred financing costs write-off and $1.5 million in prepayment penalty. These amounts will be recorded as interest expense.
Model N provides revenue management for the pharmaceutical, medical device, high tech, manufacturing and semiconductor industries.
