Progress Software closes $575 million replacement term loan, revolver

By William Gullotti

Buffalo, N.Y., Jan. 27 – Progress Software Corp. entered into a third amended and restated credit agreement on Jan. 25 for a $275 million secured term loan and a $300 million secured revolver, which may be made available in dollars and some other currencies, according to an 8-K filing with the Securities and Exchange Commission.

The new credit facility replaces Progress’s existing secured credit facility dated April 30, 2019 with JPMorgan as administrative agent, which was set to mature April 30, 2024.

JPMorgan Chase Bank, NA is the bookrunner, lead arranger and administrative agent, with Wells Fargo Bank, NA and Citizens Bank, NA as syndication agents and Bank of America, NA, Citibank, NA, Silicon Valley Bank, PNC Bank, NA and TD Bank, NA as documentation agents.

The new revolver may be increased, and new term loan commitments may be secured, by additional amounts up to the sum of $260 million and 100% consolidated EBITDA. There is also a provision for an unlimited additional increase, subject to pro forma compliance with a consolidated senior secured net leverage ratio no greater than 3.75 to 1, if existing or additional lenders are willing to make such increased commitments.

The revolver has a $25 million sublimit each for swingline loans and standby letters of credit.

The outstanding term loan was incorporated into the amended and restated credit facility.

Interest rates for the term loan and revolver are based on a benchmark rate of SOFR, Euribor, Tibor or BBSY plus a spread ranging from 100 basis points to 200 bps. The margin will be based upon the company’s leverage ratio.

The commitment fee on the undrawn portion of the revolver ranges from 12.5 bps to 27.5 bps, also based on the leverage ratio.

At closing, the applicable margins and associated commitment fees were at the third lowest rate in each range, or 150 bps and 20 bps, respectively.

The facility matures on the earlier of Jan. 25, 2027 and the date that is 181 days prior to the maturity date of Progress’ 2026 convertible senior notes.

The revolver does not require amortization of principal. The term loan requires repayment of principal at the end of each fiscal quarter, beginning with the fiscal quarter ending Feb. 28. The first eight payments are for $1,718,750 each, the following four for $3.76 million each, the next four for $3,437,500 million each, the eight after that for $5,156,250 million each and the last payment for the remaining balance. The term loan may be prepaid before maturity in whole or in part without penalty or premium.

The credit agreement requires Progress to maintain compliance with a consolidated interest charge coverage ratio and a consolidated total net leverage ratio.

Progress expects to use the revolver for general corporate purposes, which may include the acquisitions of other businesses, and may also use it for working capital.

Progress is a Bedford, Mass.-based provider of application development and digital experience technologies.

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