TeleCommunication Systems, Inc. Closes New $130 Million Senior Secured Credit Facility Through 2018
Note: Comtech Acquired TCS on 2/23/2016
ANNAPOLIS, Md., June 26, 2013 /PRNewswire/ -- TeleCommunication Systems, Inc. (TCS) (NASDAQ: TSYS) (the "Company"), a world leader in highly reliable and secure mobile communication technology, together with several of its domestic subsidiaries (collectively, the "Borrowers"), have closed on a new Credit Agreement dated June 25, 2013 (the "Credit Agreement.") Silicon Valley Bank ("SVB") is the administrative agent, co-lead arranger and joint bookrunner and GE Capital Markets, Inc. ("GECM") is co-lead arranger and joint bookrunner, General Electric Capital Corporation ("GECC") is syndication agent. Manufacturers & Traders Trust Company ("M&T") and PNC Bank ("PNC") are additional lenders to the facility.
TCS Chairman and CEO Maurice Tosé said: "Favorable credit market conditions led us to update for another 5 years the Company's arrangements for access to low-cost capital. As TCS proceeds to use its scale to address new customers around the world with secure, highly reliable wireless technology solutions, the strength and transparency of our balance sheet is an important differentiator. Silicon Valley Bank has worked with our company for more than a decade, and their focus on technology-based businesses has helped TCS to adapt to changing conditions and opportunities during that time, so we are pleased to continue to work with them and the additional very high quality institutions that have joined them in this arrangement."
The Credit Agreement provides for Senior Secured Credit Facilities (the "Senior Credit Facilities") which include (i) a $56.5 million term loan A facility ("Term Loan A Facility"), (ii) a $43.5 million delayed draw term loan facility ("Delayed Draw Term Loan Facility"), and (iii) a $30 million revolving loan facility ("Revolving Loan Facility.") The Senior Credit Facilities also include a $25 million incremental loan arrangement subject to the company's future needs and bank approval.
The Company has borrowed $56.5 million under the Term Loan A Facility. Proceeds were used for (i) repayment of the remaining balance under the Company's December 31, 2009 Loan and Security Agreement, as amended, with SVB and other lenders (the "Loan and Security Agreement"), (ii) approximately $16 million for on-going working capital and other general corporate purposes, and (iii) fees and expenses associated with the new facility. Additional liquidity is available through the undrawn $30 million Revolving Loan Facility, to be used for the Company's on-going working capital and other general corporate purposes, replacing the revolving line under the 2009 Loan and Security Agreement which has been paid off and terminated.
Loans borrowed under the Term Loan A Facility, the Revolving Loan Facility or the Delayed Draw Term Loan Facility may be borrowed at rates based on the Eurodollar/LIBOR (beginning at L +3.75%) or Alternate Base Rate (ABR) (beginning at ABR + 2.75%), which may be adjusted as provided in the Credit Agreement.
The Term Loan A Facility and the Delayed Draw Term Loan Facility have a maturity date of March 31, 2018, unless extended as provided in the Credit Agreement, and the Revolving Loan Facility has a termination date of March 31, 2018, unless extended as provided in the Credit Agreement.
The Senior Credit Facilities are secured by substantially all of the Borrowers' tangible and intangible assets, including intellectual property. The Credit Agreement contains customary representations and warranties of the Borrowers and customary covenants and events of default. Availability under the Revolving Loan Facility and the Delayed Draw Term Loan Facility is subject to certain conditions, including the continued accuracy of the Borrowers' representations and warranties and compliance with covenants.
About TeleCommunication Systems, Inc. TeleCommunication Systems, Inc. (TCS) (NASDAQ: TSYS) is a world leader in highly reliable and secure mobile communication technology. TCS infrastructure forms the foundation for market leading solutions in E9-1-1, text messaging, commercial location and deployable wireless communications. TCS is at the forefront of new mobile cloud computing services providing wireless applications for navigation, hyper-local search, asset tracking, social applications and telematics. Millions of consumers around the world use TCS wireless apps as a fundamental part of their daily lives. Government agencies utilize TCS' cyber security expertise, professional services, and highly secure deployable satellite solutions for mission-critical communications. Headquartered in Annapolis, MD, TCS maintains technical, service and sales offices around the world. To learn more about emerging and innovative wireless technologies, visit www.telecomsys.com, follow TCS @TeleComSys on Twitter or like TCS on Facebook.
This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. These statements are based upon TCS' current expectations and assumptions that are subject to a number of risks and uncertainties that would cause actual results to differ materially from those anticipated. The words, "believe," "expect," "intend," "anticipate," "should," "prospect," and variations of such words and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. Statements in this announcement that are forward-looking include, but are not limited to the statements made by Maurice Tosé that we will have access to low-cost capital for five years, and that the strength and transparency of our balance sheet is a differentiator.
Additional risks and uncertainties are described in the company's filings with the Securities and Exchange Commission (SEC). These include without limitation risks and uncertainties relating to the company's financial results and the ability of the company to (i) sustain profitability, (ii) accurately assess impairment triggering events related to our intangibles, including goodwill; (iii) continue to rely on its customers and other third parties to provide additional products and services that create a demand for its products and services, and to do so at prices that will allow us to continue to fund our operations, (iv) conduct its business in foreign countries, (v) adapt and integrate new technologies into its products and adequately expand its data centers and data delivery systems, (vi) expand its sales and business offerings in the wireless communications industry, (vii) develop software and provide services without any errors or defects and with adequate security threat protections, (viii) protect its intellectual property rights, (ix) have sufficient capital resources to fund its operations, (x) not incur substantial costs from product liability and IP infringement claims and indemnification demands relating to its software, (xi) implement its sales and marketing strategy, and (xii) successfully integrate the assets and personnel obtained in its acquisitions and investments. Existing and prospective investors are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date hereof. The company undertakes no obligation to update or revise the information in this press release, whether as a result of new information, future events or circumstances, or otherwise.
Media Contact for Comtech Telecommunications Corp.:
Michael D. Porcelain, Senior Vice President and Chief Financial Officer
(631) 962-7103 Info@comtechtel.com