Kape inks new $500m debt facilities agreement

1st Nov 2022 11:49

(Sharecast News) - Security and privacy software company Kape has entered into an agreement for new bank facilities with its existing lenders Bank of Ireland, Barclays, Citizens Bank, BNP Paribas, Citi Commercial Bank and Leumi Bank, and two new banks HSBC and Credit Suisse, it announced on Tuesday.

The AIM-traded firm said the new banking facility would replace the existing debt facilities, immediately, realising about $20m in net debt reduction, about $8m of savings on financing costs, and providing long-term financing to support Kape's expansion.

It said the new facilities comprised a $275m senior secured term facility, a $150m revolving credit facility, and an uncommitted $75m facility.

The board said the new debt facilities would replace all of Kape's existing loan facilities, including the deferred consideration facility arrangements put in place with TS Next Level Investments - an affiliate of Unikmind, the company's majority shareholder - at the time of the acquisition of ExpressVPN.

As well as providing long-term financing to better support the company's ambitious growth plans, the board added that the new debt facilities would allow Kape to exercise its option under the prepayment agreement, announced on 12 September, to prepay the $345m of deferred consideration for the acquisition of ExpressVPN at a discount.

The prepayment was expected to result in an immediate reduction in the company's net debt of around $20m.

In addition, the termination of the deferred consideration facility and the associated commitment fee, which accrues at 3.5% per annum, was expected to result in immediate savings of about $8m.

The new facilities had a four-year term, with funding expected to take place this week.

Kape saie the term facility was subject to 10% annual amortisation, and carried an opening margin of 2.75% above the applicable reference rate per annum.

It added that the margin would vary over the term of the facilities, based on the group's adjusted leverage each quarter.

Following the refinancing, Kape's adjusted leverage expected by the end of 2022 was set to be below 1x.

"We are pleased to have received such strong support from our existing partners Bank of Ireland, Barclays, Citizens Bank, BNP Paribas, Citi Commercial Bank, and Leumi Bank, as well as the new banks joining the syndicate, HSBC and Credit Suisse - this is a strong vote of confidence in Kape's management, business model and growth trajectory," said chief financial officer Oded Baskind.

"The new debt facilities will provide the business with long term financing, transforming Kape's ability to further support our ambitious growth plans as well as immediately realise approximately $20m in net debt reduction and approximately $8m of savings on financing costs.

"The new debt facilities will also provide additional firepower to continue our profitable growth path in the digital privacy and security space."

At 1249 GMT, shares in Kape Technologies were up 2.09% at 224.6p.

Reporting by Josh White for Sharecast.com.