Digi enters $150 million credit agreement for Opengear purchase

By Wendy Van Sickle

Columbus, Ohio, Dec. 16 – Digi International Inc. entered into a $150 million credit agreement on Friday with BMO Harris Bank NA as administrative agent comprising a $100 million five-year revolving loan facility and a $50 million five-year term loan facility, according to an 8-K filing with the Securities and Exchange Commission.

BMO Capital Markets Corp. is the bookrunner and a joint lead arranger along with Silicon Valley Bank.

The company used $110 million of the proceeds to help finance its acquisition of Opengear, Inc.

Remaining proceeds may be used for working capital, capital expenditures, restricted payments and acquisitions and for general corporate purposes.

Interest will be Libor plus 125 basis points to 325 bps, and the commitment fee will be 20 bps to 40 bps, in each case depending on the total net leverage ratio.

The facilities will be secured by substantially all of the assets of Digi and its subsidiaries.

The revolver will have a $50 million accordion.

Borrowings for up to $5 million under the revolver may be made in Australian dollars, Canadian dollars, euros, Japanese yen and pounds sterling.

Up to $10 million of the revolver will be available for letters of credit, and up to $10 million will be available for swingline loans.

The term facility will be made available to Digi in a single drawing on the date that the merger closes.

The loans under the term facility will amortize in equal quarterly installments in an aggregate annual amount equal to 5% of the original principal amount during the first and second years following the closing date, 7.5% of the original principal amount during the third and fourth years and 10% of the original principal amount onwards.

Financial covenants include a total net leverage ratio and a minimum fixed-charge coverage ratio.

Digi acquired Opengear for upfront cash of about $140 million with a potential for contingent consideration of up to an additional $15 million based on revenue performance through 2020.

Digi is a Hopkins, Minn.-based provider of internet of things (IoT) connectivity products, software and services. Opengear is a Piscataway, N.J.-based provider of secure IT infrastructure products and software.

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