ATLANTA, Nov. 16,
2023 /PRNewswire/ -- KORE Group Holdings,
Inc. (NYSE: KORE, KORE.WS) ("KORE" or
the "Company"), the global pure-play Internet of Things ("IoT")
hyperscaler and provider of IoT Connectivity, Solutions and
Analytics, today announced that it has completed its previously
announced transactions to refinance its approximately $300 million term loan with the issuance of a new
$185 million five-year term loan from
Whitehorse Capital ("Whitehorse")
and a $150 million strategic
investment from funds advised by Searchlight Capital Partners, L.P.
("Searchlight"). As part of the transaction, Searchlight has
appointed two members to the Company's Board of Directors.
These transactions:
- Reduce KORE's debt by almost $120
million
- Extend KORE's debt maturity, with no material debt
maturities until the second half of 2028
- Reduce cash interest expenses by approximately $14 million per year, positioning KORE to be
free cash flow positive
- Add approximately $15 million in
cash to KORE's balance sheet, providing flexibility to
continue pursuing accretive M&A opportunities
- Add two representatives to the Board of Directors from
Searchlight – David Fuller,
Operating Partner and Andrew Frey, Partner – who bring deep
expertise in the communications and technology sectors. Prior to
joining Searchlight, Mr. Fuller was President of Rogers Wireless
and also held a number of executive roles at TELUS Corporation. Mr.
Frey has invested in the communications, media and technology
sectors for the last 20 years, and is currently involved with
Searchlight's investments in Ziply Fiber, LLC, Consolidated
Communications Holdings, Inc., and Mitel Networks Corporation
"Over the past several months, we have focused on reducing our
debt and strengthening the Company's balance sheet," said
Romil Bahl, President and CEO of
KORE. "We are pleased to have supportive partners in Whitehorse and Searchlight, who have provided
us capital to achieve the Company's objectives. It is an exciting
time for KORE, as we have significantly improved our balance sheet
by reducing our total debt, extending our debt maturities, and,
importantly, increasing the Company's ongoing cash generation and
cash position, resulting in increased flexibility. These actions,
in combination with the involvement of a knowledgeable
communications investor in Searchlight, will help KORE capitalize
on the many exciting growth opportunities we see in our markets and
have greatly enhanced our ability to create long-term shareholder
value".
Searchlight Makes a $150
Million Strategic Investment in KORE via Preferred
Stock
Searchlight Capital has made a $150
million strategic investment in the form of non-convertible
preferred stock with a ten-year maturity and 13% per annum dividend
rate. Additionally, an affiliate of Searchlight has been issued
penny warrants to purchase 11.8 million shares of common stock.
Proceeds from the Searchlight investment were used for debt
repayment, transaction fees, and expenses, resulting in KORE having
additional cash for general corporate purposes.
"Searchlight has been looking for the right opportunity to
invest in the IoT market, a high-growth segment of communications
with increasing strategic importance as 5G networks become more
prevalent globally. In KORE, we believe we have found a
best-in-class operating business with an experienced management
team. KORE has a strong competitive position in IoT and many
exciting organic and acquisition-related growth opportunities. We
look forward to working with Romil and his team, as well as the
Company's Board of Directors, to drive long-term value creation for
all stakeholders," said Andrew Frey,
Partner at Searchlight.
Term Loan Refinancing Reduces Debt and Extends Debt
Maturity
With the closing of the transactions, KORE has reduced its term
loan debt from approximately $300
million to $185 million,
thereby reducing its first lien leverage ratio from 5.2x to 3.2x
trailing twelve months (TTM) Adjusted EBITDA and reducing total
debt leverage ratio from 7.3x TTM Adjusted EBITDA to 5.3x. The
$185 million, five-year senior
secured term loan facility with Whitehorse Capital bears an initial
interest rate of the Secured Overnight Financing Rate (SOFR) plus
650 basis points. The term loan agreement allows for a 25 basis
point interest rate reduction with every 0.5x reduction in KORE's
first lien leverage ratio up to a maximum rate reduction of 50
basis points. Whitehorse Capital will also hold a $25 million revolving credit facility, which will
be undrawn at closing.
Bahl concluded, "KORE has deleveraged, strengthened its balance
sheet, and increased cash flow flexibility. KORE is now in a better
position from both a financial and growth perspective than at any
other time since the Company went public over two years ago. Our
strengthened balance sheet, 80% recurring revenue, and growing
global sales pipeline position KORE for growth and tremendous
long-term shareholder value creation over the Decade of IoT."
TD Cowen acted as exclusive financial advisor to the Company in
connection with its strategic equity investment. UBS Investment
Bank acted as exclusive Debt Advisor on the Term Loan refinancing.
Kirkland & Ellis LLP acted as legal advisor to the Company in
connection with the refinancing transactions. Wachtell,
Lipton, Rosen & Katz acted as
Searchlight's legal advisor. Paul Hastings LLP acted as
Whitehorse's legal advisor.
About KORE
KORE is a pioneer, leader, and trusted advisor delivering
mission-critical IoT solutions and services. We empower
organizations of all sizes to improve operational and business
results by simplifying the complexity of IoT. Our deep IoT
knowledge and experience, global reach, purpose-built solutions,
and deployment agility accelerate and materially impact our
customers' business outcomes. For more information, visit
www.korewireless.com.
About Searchlight
Searchlight is a global private investment firm with
approximately $12 billion in assets
under management and offices in New
York, London, Toronto and Miami. Searchlight seeks to invest in
businesses where its long-term capital and strategic support
accelerate value creation for all stakeholders. For more
information, please visit www.searchlightcap.com.
Cautionary Note on Forward-Looking Statements
This
press release includes certain statements that are not historical
facts but are forward-looking statements for purposes of the safe
harbor provisions under the United States Private Securities
Litigation Reform Act of 1995. Forward-looking statements generally
are accompanied by words such as "believe," "may," "will,"
"estimate," "continue," "anticipate," "intend," "expect," "should,"
"would," "plan," "predict," "potential," "seem," "seek," "future,"
"outlook," "target" and similar expressions that predict or
indicate future events or trends or that are not statements of
historical matters. These forward-looking statements include but
are not limited to, statements regarding benefits and use of
proceeds of the preferred stock investment by Searchlight and the
Company's new term and revolving credit facilities, statements
relating to the Company's debt, debt maturity, operating cash flow,
balance sheet, interest expense, cash position, estimates and
forecasts of revenue, margin, adjusted EBITDA and other financial
and performance metrics, projections of market opportunity and
conditions, potential revenue opportunities in KORE's sales funnel,
and related expectations. These statements are based on various
assumptions and on the current expectations of KORE's management.
These forward-looking statements are provided for illustrative
purposes only and are not intended to serve as and must not be
relied on by any investor or other person as a guarantee, an
assurance, a prediction, or a definitive statement of fact or
probability. Actual events and circumstances are difficult or
impossible to predict and will differ from assumptions. Many actual
events and circumstances are beyond the control of KORE. These
forward-looking statements are subject to a number of risks and
uncertainties, including general economic, financial, legal,
political, and business conditions and changes in domestic and
foreign markets; the potential effects of COVID-19; risks related
to the satisfaction of all conditions precedent and closing
conditions in the definitive agreements for the term loan and
revolving credit facilities and the preferred stock investment;
risks related to the rollout of KORE's business and the timing of
expected business milestones; risks relating to the integration of
KORE's acquired companies, including the acquisition of Twilio's
IoT business, changes in the assumptions underlying KORE's
expectations regarding its future business; our ability to
negotiate and sign a definitive contract with a customer in our
sales funnel; our ability to realize some or all of the TCV of
customer contracts as revenue, including any contractual options
available to customers or contractual periods that are subject to
termination for convenience provisions; the effects of competition
on KORE's future business; and the outcome of judicial proceedings
to which KORE is, or may become a party. If the risks materialize
or assumptions prove incorrect, actual results could differ
materially from the results implied by these forward-looking
statements. There may be additional risks that KORE presently does
not know or that KORE currently believes are immaterial that could
also cause actual results to differ materially from those contained
in the forward-looking statements. In addition, forward-looking
statements reflect KORE's expectations, plans, or forecasts of
future events and views as of the date of this press release. KORE
anticipates that subsequent events and developments will cause
these assessments to change. However, while KORE may elect to
update these forward-looking statements at some point in the
future, KORE specifically disclaims any obligation to do so. These
forward-looking statements should not be relied upon as
representing KORE's assessments as of any date subsequent to the
date of this press release. Accordingly, undue reliance should not
be placed upon the forward-looking statements.
KORE Investor
Contact:
|
KORE Media
Contact:
|
Charley Brady
|
Carla Deisenroth
|
Vice President,
Investor Relations
|
Vice President,
Strategy & Marketing
|
cbrady@korewireless.com
|
cdeisenroth@korewireless.com
|
+1-678-392-2386
|
+1-248-982-2759
|
|
|
Searchlight Media
Contact:
|
|
Prosek
Partners
|
|
pro-searchlight@prosek.com
|
|
+1 857 302
3712
|
|
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SOURCE KORE Wireless