Adtran enters $100 million five-year replacement credit agreement

By Marisa Wong

Los Angeles, July 22 – Adtran Holdings, Inc. and wholly owned subsidiary Adtran Inc. entered into a $100 million credit agreement on July 18 with a syndicate of banks including Wells Fargo Bank, NA as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

The credit agreement may be increased to up to $400 million upon Adtran or Adtran Holdings executing a domination and profit and loss transfer agreement with ADVA Optical Networking SE or a parent of ADVA, among other conditions.

The credit agreement will mature on July 18, 2027, subject to extension options.

All U.S. borrowings (other than swingline loans, which will bear interest at the base rate) will bear interest at adjusted term SOFR plus the applicable rate, which ranges from 140 basis points to 215 bps, provided that the sum is subject to a 0% floor.

All E.U. borrowings (other than swingline loans) will bear interest at Euribor plus the applicable rate, which ranges from 150 bps to 225 bps, provided that the sum is subject to a 0% floor.

The applicable rate for SOFR and Euribor loans is based on the company’s consolidated net leverage ratio.

In addition, the borrower is required to pay a commitment fee for unutilized revolving loan commitments and an additional commitment ticking fee of 25 bps on the commitment amounts of each lender until the earliest of the date the credit facility is increased, Adtran’s voluntary termination of the credit facility commitment and Dec. 31, 2023.

The borrower is also required to pay a participation fee to the administrative agent for the account of each lender with respect to its participations in letters of credit at the then applicable rate for SOFR loans.

The credit agreement requires that the consolidated total net leverage ratio not exceed 3.25 to 1.0 through Sept. 30, 2024 and 2.75 to 1.00 from and after Dec. 31, 2024 and also requires that the consolidated interest coverage ratio not fall below 3.00 to 1.00.

The credit agreement replaces Adtran’s prior credit agreements with Wells Fargo and Cadence Bank, NA entered into on April 1, 2022 and Nov. 4, 2020, respectively. In connection with entry into the new credit agreement, all outstanding borrowings under the prior credit agreements have been repaid, and those agreements have been terminated.

As of July 18, the initial borrowings outstanding under the new credit agreement’s revolving line of credit were $50 million. In addition, the letters of credit outstanding under the prior credit facilities were replaced with coverage under this new credit facility in an aggregate amount of $17.5 million.

Loan proceeds are expected to be used for general corporate purposes and costs associated with the Adtran Holdings’ business combination with ADVA.

Wells Fargo Securities, LLC, BofA Securities, Inc. and Deutsche Bank AG Filiale Deutschlandgeschaeft are the joint lead arrangers and joint bookrunners.

Bank of America, NA and Deutsche Bank are syndication agents.

Citibank, NA is documentation agent.

Adtran is a Huntsville, Ala.-based provider of telecommunications networking equipment and internetworking products.

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