Digi International Enters into New Senior Secured Credit Facility
December 11 2023 - 4:05PM
Business Wire
Expect to Save ~$4M in Interest Payments in
First Year
Digi International® Inc. (Nasdaq: DGII), a leading global
provider of business and mission critical Internet of Things
("IoT") products, services and solutions, today announced it has
entered into a new senior secured credit facility.
The new bank debt provides Digi a $250 million senior secured
revolving credit facility with an accordion feature that provides
for additional borrowing capacity of the greater of $95 million or
one hundred percent of trailing twelve month adjusted EBITDA. The
new facility replaces the existing Term B loan, which had a balance
of $214 million. With an initial interest rate of SOFR + 250 bps on
the revolver, Digi expects to save 300 bps on interest annually.
Digi estimates this will save approximately $4 million in interest
payments over the first year of the facility.
“We’re thrilled to work closely with our key banking
relationships to save millions in interest annually with this new
facility,” said Jamie Loch, Executive Vice President, CFO, and
Treasurer. “After taking into account the costs to put this
facility in place, we expect to see positive net cash from the
transaction over the next three months. This facility will provide
us with more flexibility to support our growth initiatives, both
organically and inorganically. We remain committed to aggressively
paying down this debt and delivering strong financial results in
FY24.”
Subject to the terms of the new facility, Digi may use
borrowings for working capital, capital expenditures, restricted
payments, acquisitions, and other general corporate purposes.
Lenders for the facility include BMO Bank N.A., as
Administrative Agent, Bank of America, N.A., and MUFG Bank,
Ltd.
Key covenants on the revolver include a maximum total net
leverage ratio of 3.0x and minimum interest coverage of 3.0x. Based
on Digi’s September 30, 2023 financial results, the Company is
comfortably in compliance with these covenants.
Impact on First Fiscal Quarter GAAP
Results
The reduced interest due under the new credit facility is
anticipated to generate positive net cash flow in fiscal 2024.
However, due to a one-time non-cash charge associated with
previously incurred expenses relating to the Term B loan that were
being amortized over the term of that debt, the entry into the new
credit facility will have a negative impact on our GAAP net income
per share in our fiscal first quarter of an estimated $0.26 per
weighted average diluted share, assuming a share count of 37.5
million shares.
The entry into this facility does not impact the guidance we
provided in our fiscal 2023 fourth quarter earnings release on
November 9, 2023.
About Digi International
Digi International (Nasdaq: DGII) is a leading global provider
of IoT connectivity products, services and solutions. We help our
customers create next-generation connected products and deploy and
manage critical communications infrastructures in demanding
environments with high levels of security and reliability. Founded
in 1985, we’ve helped our customers connect over 100 million things
and growing. For more information, visit Digi's website at
www.digi.com.
Forward-Looking
Statements
This press release contains forward-looking statements that are
based on management’s current expectations and assumptions. These
statements often can be identified by the use of forward-looking
terminology such as "assume," "believe," "anticipate," "intend,"
"estimate," "target," "may," "will," "expect," "poised,"
"potential," "project," "should," or "continue," or the negative
thereof or other variations thereof or similar terminology. Among
other items, these statements relate to expectations about savings
of interest payments as well as potential uses of proceeds from the
new credit facility. Such statements are not guarantees of future
performance and involve certain risks, uncertainties and
assumptions. Among others, these include risks related to ongoing
and varying inflationary and deflationary pressures around the
world and the monetary policies of governments globally as well as
present concerns about a potential recession and the ability of
companies like us to operate a global business in such conditions
as well as negative effects on product demand and the financial
solvency of customers and suppliers in such conditions, risks
related to ongoing supply chain challenges that continue to impact
businesses globally, risks arising from the present wars in Ukraine
and the Middle East, the highly competitive market in which our
company operates, rapid changes in technologies that may displace
products sold by us, declining prices of networking products, our
reliance on distributors and other third parties to sell our
products, the potential for significant purchase orders to be
canceled or changed, delays in product development efforts,
uncertainty in user acceptance of our products, the ability to
integrate our products and services with those of other parties in
a commercially accepted manner, potential liabilities that can
arise if any of our products have design or manufacturing defects,
our ability to integrate and realize the expected benefits of
acquisitions, our ability to defend or settle satisfactorily any
litigation, the impact of natural disasters and other events beyond
our control that could negatively impact our supply chain and
customers, potential unintended consequences associated with
restructuring, reorganizations or other similar business
initiatives that may impact our ability to retain important
employees or otherwise impact our operations in unintended and
adverse ways, and changes in our level of revenue or profitability
which can fluctuate for many reasons beyond our control. These and
other risks, uncertainties and assumptions identified from time to
time in our filings with the United States Securities and Exchange
Commission, including without limitation, our Annual Report on Form
10-K for the year ended September 30, 2023 and subsequent reports
on Form 10-Q, could cause our actual results to differ materially
from those expressed in any forward-looking statements made by us
or on our behalf. Many of such factors are beyond our ability to
control or predict. These forward-looking statements speak only as
of the date for which they are made. We disclaim any intent or
obligation to update any forward-looking statements, whether as a
result of new information, future events or otherwise.
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version on businesswire.com: https://www.businesswire.com/news/home/20231211606001/en/
Investor Contact: Rob Bennett Investor Relations Digi
International 952-912-3524 Email: rob.bennett@digi.com
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