DATA Communications Management amends loan facilities’ covenants

By Angela McDaniels

Tacoma, Wash., Dec. 20 – DATA Communications Management Corp. made changes to its amortizing term loan facilities with Fiera Private Debt Fund III LP, Fiera Private Debt Fund IV LP and Fiera Private Debt Fund V LP and its C$19 million non-revolving term loan facility with Crown Capital Partner Funding, according to a company news release.

On Thursday, the company entered into a waiver and amendment agreement for the Fiera credit agreements. The amendment suspends the company’s obligation to comply with its total funded debt-to-EBITDA covenant for the quarter ending Dec. 31 and establishes a new total funded debt-to-EBITDA ratio covenant of no more than 4.5 to 1.0 that will apply for the first and second quarters of 2020, after which the original covenant of no greater than 3.0 to 1.0 will apply.

In addition, during this period EBITDA for the purposes of such covenant will be calculated on an annualized basis starting with actual EBITDA achieved for the quarter ending Dec. 31.

The amendment also revised the company’s debt service coverage ratio covenant, such that its minimum debt service coverage ratio will be 0.75 to 1.0 for the quarters ending Dec. 31 and March 31 and 1.0 to 1.0 for the quarter ending June 30, 2020. Thereafter, the original covenant of at least 1.5 to 1.0 will apply.

The amendment also confirms that the monthly principal amortization of the loans under the Fiera credit agreements will recommence at the originally scheduled rate in January.

The amendment also increased the company’s maximum total funded debt to C$93 million.

Crown amendments

Also on Thursday, the company entered into an amendment to the Crown credit agreement. Under the amendment, the calculation of the company’s net debt-to-EBITDA ratio covenant was modified such that EBITDA is calculated on an annualized basis for the first three quarters of 2020, commencing with EBITDA for the quarter ending March 31.

The net debt-to-EBITDA ratio covenant was further modified such that the company is required to maintain a maximum net debt-to-EBITDA ratio of 5.0 to 1.0 for the quarters ending March 31 and June 30, 2020, a maximum of 4.5 to 1.0 for the quarters ending Sept. 30, 2020 and Dec. 31, 2020 and a maximum of 3.0 to 1.0 for each quarter thereafter.

The fixed charge coverage ratio covenant under the Crown credit agreement was also modified such that the company must maintain a fixed charge coverage ratio of at least 1.1 to 1.0 for the quarter ending Sept. 30, 2020, at least 1.15 to 1.0 for the quarter ending Dec. 31, 2020 and at least 1.25 to 1.0 for each quarter thereafter. The fixed charge coverage ratio will not apply for the quarters ending Dec. 31, March 31 and June 30, 2020.

The amendment also added a new financial covenant requiring the company to have EBITDA of not less than C$4 million for the quarter ending March 31 and cumulative EBITDA of not less than C$8.0 million for the six-month period ending June 30, 2020.

The amendment increased the interest rate on the Crown credit agreement to 12% from 10%, with the incremental 200 basis points per year being accrued and payable at the earlier of maturity or prepayment in full.

In connection with the Crown amendment, the company agreed to amend the exercise price of the 960,000 common share purchase warrants issued to Crown in May 2018 to C$0.26 from C$1.75 and the 550,000 common share purchase warrants issued to Crown in August to C$0.26 from C$1.08. These amendments will become effective Jan. 8.

DATA Communications Management provides marketing and business communication solutions and is based in Brampton, Ont.

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