Avid Technology lifts credit facility, extends term loan, cuts pricing

By Marisa Wong

Morgantown, W.Va., May 15 – Avid Technology, Inc. entered into a fourth amendment on May 10 to its credit agreement dated Feb. 26, 2016 with Cerberus Business Finance, LLC as administrative agent to extend the maturity date of its term loan to May 10, 2023, according to an 8-K filing with the Securities and Exchange Commission.

The amendment also increases the amount of the term loan to $127.5 million from $105 million and increases the amount of the revolver to $22.5 million from $10 million.

Under the amended credit agreement, interest accrues on outstanding borrowings at a rate of Libor plus 662.5 basis points, lowered from Libor plus 675 bps.

The amendment also modifies the schedule for required repayments of the term loan as follows: $1,437,500 is required to be repaid on June 30, 2018; $318,750 is required to be repaid on the last day of each quarter from Sept. 30, 2018 through June 30, 2020; $796,875 is required to be repaid on the last day of each quarter from July 1, 2020 through June 30, 2021; and $1,593,750 is required to be repaid on the last day of each quarter from July 1, 2021 through May 10, 2023.

In addition, the amendment modifies the leverage ratio covenant. Following the effective date of the amendment, the company is required to maintain a leverage ratio of no greater than 3.00 to 1.00 for each of the three quarters ending June 30, 2018 through Dec. 31, 2018; 2.50 to 1.00 for each of the four quarters ending March 31, 2019 through Dec. 31, 2019; 2.25 to 1.00 for each of the five quarters ending March 31, 2020 through March 31, 2021; 2.00 to 1.00 for each of the seven quarters ending June 30, 2021 through Dec. 31, 2022; and 1.50 to 1.00 for the quarter ending March 31, 2023.

The amendment removes a provision from the financing agreement that would have accelerated the maturity of the term loan to May 15, 2020 if the company’s convertible notes due June 2020 were not repaid or refinanced by that date. The amendment also increases the amount of convertible notes the company may purchase to $40 million from $15 million.

On the closing date, the company drew down incremental borrowings of $22.5 million under the term loan.

Avid is a Burlington, Mass.-based provider of audio and video technology for media organizations and independent professionals.

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