New York, July 28 – KORE Wireless Group Inc. signed a backstop credit agreement with Fortress Credit Corp. allowing it to issue up to $120 million of notes that will be convertible into common stock after the company goes public via a merger with Cerberus Telecom Acquisition Corp., a special-purpose acquisition company (SPAC).
The facility will provide any additional liquidity needed to meet the minimum cash condition for closing of the merger with Cerberus Telecom, according to a news release.
Notes issued under the agreement will be priced at par, pay interest at 5.5% and mature in seven years. On closing of the merger they will be convertible into the public company’s common stock at $12.50 per share.
After two years the company may redeem the notes for cash or force conversion in to shares at $16.25 per share.
The backstop agreement includes a lock up for six months after the merger closes that prohibits Fortress from hedging the notes by selling short the company’s stock or using the company’s warrants or options.
KORE plans to publicly list its common stock in the third quarter, subject to completion of the merger with Cerberus Telecom and satisfaction or waiver of the cash condition.
“We worked with KORE and our great long-time partners at Fortress to secure this backstop facility as a preemptive measure to remove the redemption risk that currently exists in the SPAC market” said Cerberus Telecom chief executive officer Tim Donahue in the news release.
“Given KORE’s recent announcements concerning its record Q1 earnings and continued positive business trajectory, we remain steadfast in our confidence that the public shareholders of CTAC will vote in favor of the transaction. We felt this facility was a prudent back-up measure to give us further certainty that the transaction will be completed, and KORE will become a successful public company.”
KORE will be able to draw on the facility for redemptions of shares exceed $139.2 million, according to an 8-K filing with the Securities and Exchange Commission.
The company paid a $1.5 million commitment fee for the facility.
The lender will be Drawbridge Special Opportunities Fund LP.
KORE is an Atlanta-based provider of internet of things solutions and connectivity as a service.
| Issuer: | KORE Wireless Group Inc.
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| Issue: | Exchangeable notes
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| Amount: | Up to $120 million
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| Maturity: | Seven years
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| Coupon: | 5.5%
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| Conversion price: | $12.50 after merger with Cerberus Telecom Acquisition Corp.
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| Call: | After two years, redemption for cash or forced conversion at $16.25
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| Commitment fee: | $1.5 million
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| Investor: | Drawbridge Special Opportunities Fund LP
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| Trustee: | Wilmington Trust, NA
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| Issuer’s counsel: | Kirkland & Ellis LLP
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| Investor’s counsel: | Skadden, Arps, Slate, Meagher & Flom LLP
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| Cerberus Telecom’s counsel: | Milbank LLP
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