Reaches agreement in principle with debenture
holders and term loan lender to reduce debt
Strong capital structure will support
KLDiscovery’s growth model and investment in market-leading client
solutions
Transaction expected to close in the near
term
KLDiscovery Inc. (“KLDiscovery” or the “Company”), a global
leader in data management, information governance, eDiscovery, and
advisory services solutions, today announced that it has reached an
agreement in principle with its principal convertible debenture
holders and its principal term loan lender to significantly reduce
the Company’s long-term debt and strengthen its financial position,
enabling KLDiscovery to focus on its growth model and drive
investment in its market-leading client solutions.
“Today’s announcement marks an important step forward for our
company as we move into the future with a capital structure that
supports our industry-leading team and long-term growth and
profitability objectives,” said Chris Weiler, Chief Executive
Officer of KLDiscovery. “KLDiscovery is a strong business with a
leading market position, premier brands, and a clear vision for the
future. This agreement underscores our key capital partners’ belief
in that vision and will provide our company with the financial
flexibility necessary to continue delivering the innovation,
advanced thinking, and best-in-class offerings that our clients
have come to expect from us. The global KLDiscovery team is
energized now more than ever and is moving forward with a singular
focus on helping our clients address their most challenging data,
legal, and regulatory needs.”
Subject to the execution of definitive documents, the
transaction provides for a conversion of the Company’s outstanding
convertible notes into approximately 96% of KLDiscovery’s pro forma
outstanding common equity. Additionally, the maturity on the
Company’s term loan will be extended to August 2027.
This agreement in principle reflects the strong support of
KLDiscovery’s debenture holders and term loan lender and positions
the Company to continue its focus on investing in growth and
technology-enabled services and software. The estimated equity
split described above may be adjusted as a result of ongoing
discussions and definitive documentation of the transaction.
This news comes on the heels of KLDiscovery’s record breaking
financial performance in 2023, reflecting strong full-year revenue,
EBITDA, and adjusted EBITDA. The Company is building on this
momentum by continuing to expand at scale to address the largest
and most complex matters on behalf of its growing global customer
base. KLDiscovery continues to make significant investments in its
best-in-class technology, headlined by Nebula, the Company’s
flagship, end-to-end AI / ML powered solution that serves as a
singular platform of engagement for legal and other types of
data.
KLDiscovery Advisors
Gibson, Dunn & Crutcher LLP is serving as legal counsel,
Guggenheim Securities, LLC is serving as investment banker,
AlixPartners is serving as financial advisor, and C Street Advisory
Group is serving as strategic communications advisor.
About KLDiscovery
KLDiscovery provides technology-enabled services and software to
help law firms, corporations, and government agencies solve complex
data challenges. With offices in 26 locations across 17 countries,
KLDiscovery is a global leader in delivering best-in-class data
management, information governance, and eDiscovery solutions to
support the litigation, regulatory compliance, and internal
investigation needs of clients. Serving organizations for over 30
years, KLDiscovery offers data collection and forensic
investigation, early case assessment, data processing, application
software and data hosting for web-based document reviews, and
managed document review services. In addition, through its global
Ontrack data management business, KLDiscovery delivers world-class
data recovery, disaster recovery, email extraction and restoration,
data destruction, and tape management. KLDiscovery has been
recognized as one of the fastest growing companies in North America
by both Inc. Magazine (Inc. 5000) and Deloitte (Deloitte’s
Technology Fast 500), and CEO Chris Weiler was a 2014 Ernst &
Young Entrepreneur of the Year™. Additionally, KLDiscovery is a
Relativity Certified Partner and maintains ISO/IEC 27001 Certified
data centers around the world. Visit www.kldiscovery.com to learn
more.
Forward Looking Statements
This press release includes “forward looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, Section 21E of the Securities Exchange Act of 1934 and the
United States Private Securities Litigation Reform Act of 1995. All
statements contained in this press release other than statements of
historical facts, including, without limitation, statements
regarding the terms and timing of the debt equitization
transaction, the Company's vision for the future and its key
capital partners’ belief in that vision, the benefits of future
financial flexibility to be provided to the Company, Company
expansion and Company investment in growth and technology-enabled
services and software are forward-looking statements. When used in
this press release, the words “estimated,” “expects,”
“anticipates,” “forecasts,” “believes,” “may,” “will,” “should,”
“future” and variations of these words or similar expressions (or
the negative versions of such words or expressions) are intended to
identify forward-looking statements.
These forward-looking statements are not guarantees of future
performance, conditions, results or events, and involve a number of
known and unknown risks, uncertainties, assumptions and other
important factors, many of which are outside KLDiscovery’s
management’s control, that could cause actual results or outcomes
to differ materially from those discussed in the forward-looking
statements. Important factors, among others, that may affect actual
results or outcomes include: consequences of KLDiscovery’s
substantial levels of indebtedness, including the pending maturity
and potential acceleration thereof in June 2024, and its ability to
repay its debt obligations as they become due or to secure
alternative sources of financing; entry into definitive agreements
with respect to and closing of a transaction in respect of the
agreement in principle described above with KLDiscovery’s principal
debenture holders and principal term loan lender; KLDiscovery’s
potential failure to comply with privacy and information security
regulations governing the client datasets it processes and stores;
KLDiscovery’s ability to operate in highly competitive markets, and
potential adverse effects of this competition; risk of decreased
revenues if KLDiscovery does not adapt its pricing models; the
ability to attract, motivate and retain qualified employees,
including members of KLDiscovery’s senior management team; the
ability to maintain a high level of client service and expand
operations; potential issues with KLDiscovery’s product offerings
that could cause legal exposure, reputational damage and an
inability to deliver services; KLDiscovery’s ability to develop and
successfully grow revenues from new products such as Nebula,
improve existing products and adapt its business model to keep pace
with industry trends; risk that KLDiscovery’s products and services
fail to interoperate with third-party systems; potential
unavailability of third-party technology that KLDiscovery uses in
its products and services; potential disruption of KLDiscovery’s
products, offerings, website and networks; difficulties resulting
from KLDiscovery’s implementation of new consolidated business
systems; the ability to deliver products and services following a
disaster or business continuity event; disease or similar public
health threat, such as COVID-19; potential unauthorized use of our
products and technology by third parties and/or data security
breaches and other incidents; potential intellectual property
infringement claims; and the ability to comply with various trade
restrictions, such as sanctions and export controls, resulting from
KLDiscovery’s international operations. These risks and other
factors discussed in the “Risk Factors” section of KLDiscovery’s
Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed
with the Securities Exchange Commission (“SEC”) and any other
reports KLDiscovery files with the SEC, could cause actual results
to differ materially from those expressed or implied by
forward-looking statements made by KLDiscovery or on its behalf.
Given these risks and uncertainties, investors should not place
undue reliance on forward-looking statements as a prediction of
actual results or outcomes. All statements speak only as of the
date made, and unless legally required, KLDiscovery undertakes no
obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise.
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Danny Zambito 888.811.3789 danny.zambito@kldiscovery.com