KVH Industries to use some asset sale proceeds to pay down loan

By Angela McDaniels

Tacoma, Wash., May 16 – KVH Industries, Inc.’s lenders agreed to let the company keep a portion of the proceeds of an asset disposition instead of applying all of the proceeds to paying down its credit facility, according to an 8-K filing with the Securities and Exchange Commission.

Subsidiary KVH Media Group Ltd. sold all of the share capital of its subsidiaries Super Dragon Ltd. and Videotel Marine Asia Ltd. to Pelican Holdco Ltd., an affiliate of a private equity fund managed by Oakley Capital Ltd., on Monday.

KVH Media Group advanced $89.4 million to Pelican Holdco, which then used the advance to pay the estimated purchase price for Super Dragon and Videotel Marine.

Under the terms of the credit agreement, KVH must prepay outstanding loans in an aggregate amount equal to 100% of the net cash proceeds received by KVH or any subsidiary from a disposition. The prepayments must be applied first to principal repayment installments of outstanding term loans in inverse order of maturity and second to repayment of revolving loans.

Under a consent agreement reached on Monday, the lenders consented to the sale and the advance, and they agreed that the company could retain the portion of the net proceeds remaining after applying those proceeds first to the repayment of the term loans (including any accrued interest) until repaid in full and second to the amounts outstanding under the revolving loan facility until, on a pro forma basis, the consolidated leverage ratio is not more than 2.75x.

As of Monday, about $21.4 million of principal and interest was outstanding under the term loans and about $15 million was outstanding under the revolver, a substantial amount of which the company currently expects to prepay.

In the lender consent, the parties agreed that, notwithstanding the prepayment of the revolving loans, the amount of the revolving loan facility would remain at $20 million.

Bank of America, NA and Washington Trust Co. are the lenders. Bank of America is also the administrative agent.

Based in Middletown, R.I., KVH manufactures products for internet, television and voice services via satellite.

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