Infor ends Q3 with $362 million cash, sees continued 'strong' cash flows, but no debt takeout plans

By Paul Deckelman

New York, April 10 - Infor, Inc. generated what its interim chief financial officer called "strong" cash flow during the company's fiscal third quarter, and he expects continued robust cash flows for the remainder of the current fiscal year.

However, the New York-based business software company's chief executive officer said there are no plans on the drawing board to use that cash to pay down the more than $5 billion of debt that Infor has on its balance sheet, other than normal amortization.

CEO Charles Phillips answered in the affirmative when asked by an analyst during the company's conference call following the release of its latest financial results whether it plans to just hold onto its cash - and thus also keep the debt on the balance sheet - so the company can be opportunistic about potential acquisitions.

But even on the latter front, Phillips said, "We don't have any particular plans [for the cash flow]. Every now and again we do some mid-sized acquisitions, and we're constantly looking at those, but other than that, there's nothing big planned."

Infor, which was created several years ago when Golden Gate Capital's wholly owned GGC Software Holdings Inc. subsidiary first acquired business software companies SoftBrands Inc. and Lawson Software, Inc., ended its 2013 fiscal third quarter on Feb. 28 with total debt of $5.349 billion. That debt load included several billion borrowed in the bank debt and junk bond markets to finance the acquisitions of SoftBrands and Lawson.

The company's nearest maturity was $355 million of B-1 term debt coming due in October of 2016, and its closest bond maturity was its $1.015 billion of 9 3/8% senior notes and €250 million of 10% senior notes, both due in April 2019.

With a cash balance at the end of the quarter of $362.9 million, net debt stood at $4.986 billion. Trailing 12-month adjusted EBITDA stood at $811 million, for a total debt leverage ratio of 6.6 times EBITDA and a net debt leverage ratio of 6.2 times, which interim CFO Jay Hopkins said "is consistent" with where the ratio was at the end of the previous fiscal quarter last November.

Hopkins said that the company's healthy cash flow included "strong" cash flow from operations of $141.3 million during the first nine months of the year.

He said: "Our cash balance has grown significantly from Q2 as a result of our significant maintenance billing [of its established software customers] in January. Our cash balance is expected to grow through the end of the fiscal year as we have another significant maintenance billing period in May."

The 2013 fiscal year ends on May 31.

Hopkins said that during the first nine months of the fiscal year, Infor paid out $28.2 million of deferred financing fees, which was primarily associated with the cost of refinancing some of its term loan debt during the fiscal second quarter.

Last September, the company entered into a $2.79 billion term loan B-2 facility due in April 2018. It was originally going to refinance only $750 million of the more than $2 billion of existing debt, but then decided to take out the whole of the existing loan. Pricing tightened by 100 basis points versus the old loan, to 400 bps plus a 1.25% Libor floor.

Hopkins said that during the first nine months of the fiscal year, the company made net principal payments on its long-term debt of $46.6 million.

© 2015 Prospect News.
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