Safeguard amends loan agreement, lifts availability to $100 million

By Sarah Lizee

Olympia, Wash., May 14 – Safeguard Scientifics, Inc. entered into an amendment to its loan agreement with HPS Investment Partners, LLC on Friday to increase the availability to be borrowed to $100 million from $75 million, according to an 8-K filing with the Securities and Exchange Commission.

The loan consists of a $85 million first-lien term loan, $50 million of which was outstanding prior to entering into the amendment and $35 million of which was drawn in connection with the amendment, and an up to $15 million first-lien revolving loan.

Safeguard may borrow under the revolving loan until Dec. 30.

Under the amendment, if as of any quarter-end date the total amount of Safeguard’s cash or cash equivalents exceeds $50 million, the company will be required to prepay outstanding principal amounts under the loan, plus any applicable interest and prepayment fees, in an amount equal to 100% of the excess.

Safeguard is permitted to make deployments to only existing partner companies and those deployments may not exceed, when combined with deployments between Jan. 1 and the date of the amendment, $40 million in total.

The company is not permitted to incur or pay for any expenses in an amount that would cause the total expenses incurred and/or paid in any 12-month period after the date of the amendment to exceed $11.5 million.

Safeguard is no longer required to maintain a specific tangible net worth and is no longer required to comply with some diversification requirements and concentration limits with respect to its capital deployments to partner companies.

The amendment required a $625,000 payment for the closing fee and a $750,000 payment for the amendment fee.

In connection with the amendment, Safeguard intends to pay in full and retire its 5.25% convertible senior debentures due May 15.

Safeguard Scientifics is a technology incubator based in Wayne, Pa.

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