KVH Industries enters $80 million five-year term loan, revolver

By Marisa Wong

Madison, Wis., July 3 – KVH Industries, Inc. entered into on July 1 a five-year senior credit facility agreement totaling up to $80 million with Bank of America, NA as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

Merrill Lynch, Pierce, Fenner & Smith Inc. was the lead arranger and bookrunner.

The facility includes an up to $15 million revolver and up to $65 million term loan.

Proceeds will be used for general corporate purposes, including the refinancing of the $30 million of debt currently outstanding under the company’s existing credit facility and permitted acquisitions.

The $65 million term note evidencing the term loan was executed in connection with KVH’s acquisition of all of the outstanding shares of Videotel. Proceeds of $35 million were used to pay for the acquired Videotel shares, and roughly $30 million was used to refinance the existing borrowings.

The prior credit facility, which has been repaid in full, was terminated upon closing of the new facility.

The new loans bear interest at Libor plus 150 basis points to 225 bps, depending on the company’s consolidated leverage ratio.

The company must make principal repayments on the term loan of $1,219,000 at the end of each of the first eight three-month periods after closing. After that, the company must make principal repayments of $1,625,000 for each succeeding three-month period until the maturity of the loan on July 1, 2019.

The credit agreement contains provisions requiring mandatory prepayments with 100% of proceeds from certain dispositions to the extent not reinvested in the company’s business within a stated period, 50% of proceeds from stated equity issuances and 100% of proceeds from certain receipts of more than $250,000 outside the ordinary course of business.

The prepayments are first applied to the term loan, in inverse order of maturity, and then to the revolver.

The credit agreement contains two financial covenants, a maximum consolidated leverage ratio and a minimum consolidated fixed-charge coverage ratio. The maximum consolidated leverage ratio is initially 2.25 to 1.00 and declines to 1.50 to 1.00 on Dec. 31 and to 1.00 to 1.00 on Sept. 30, 2015. The minimum consolidated fixed-charge coverage ratio may not be less than 1.25 to 1.00 at any time after Dec. 31.

Based in Middletown, R.I., KVH manufactures products for internet, television and voice services via satellite.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.