TeleCommunication Systems, Inc. Closes New $130 Million Senior Secured Credit Facility Through 2018
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 Tose 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.
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