Digi gets commitments for $150 million of loans from BMO for merger

By Sarah Lizee

Olympia, Wash., Nov. 8 – Digi International Inc. entered into a commitment letter on Thursday with BMO Harris Bank NA under which BMO committed to provide a $100 million five-year revolving loan facility and a $50 million five-year term loan facility to help finance Digi’s planned acquisition of Opengear, Inc., according to an 8-K filing with the Securities and Exchange Commission.

Interest will be Libor plus 125 basis points to 325 bps and the commitment fee will be 20 bps to 40 bps, in each case depending on the total net leverage ratio.

The facilities will be secured by substantially all of the assets of Digi and its subsidiaries.

Proceeds from the revolver may be used for working capital and other general corporate purposes and, together with the term facility, to finance a portion of the merger.

The revolver will have a $50 million accordion.

Borrowings for up to $5 million under the revolver may be made in Australian dollars, Canadian dollars, euros, Japanese yen and pounds sterling.

Up to $10 million of the revolver will be available for letters of credit, and up to $10 million will be available for swingline loans.

The term facility will be made available to Digi in a single drawing on the date that the merger closes.

The loans under the term facility will amortize in equal quarterly installments in an aggregate annual amount equal to 5% of the original principal amount during the first and second year following the closing date, 7.5% of the original principal amount during the third and fourth year and 10% of the original principal amount onwards.

Financial covenants include a total net leverage ratio and a minimum fixed-charge coverage ratio.

Closing of the facilities is expected to be no later than Jan. 6.

Digi agreed to acquire Opengear for upfront cash of about $140 million with a potential for contingent consideration of up to an additional $15 million based on revenue performance through 2020. In addition to proceeds from the new facilities, Digi plans to use cash on hand to finance the transaction.

Closing of the merger is subject to customary conditions, including antitrust regulatory clearance.

Digi is a Hopkins, Minn.-based provider of internet of things (IoT) connectivity products, software and services. Opeangear is a Piscataway, N.J.-based provider of secure IT infrastructure products and software.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.