DTS enters $175 million credit agreement for iBiquity acquisition

By Wendy Van Sickle

Columbus, Ohio, Oct. 7 – DTS, Inc. entered into a five-year $175 million credit agreement consisting of a $50 million revolving credit facility and a $125 million secured term loan on Oct. 1, according to an 8-K filed with the Securities and Exchange Commission.

The debt is in connection with DTS’ acquisition of iBiquity Digital Corp. for $172 million in cash.

At closing, DTS borrowed $125 million under the term loan and $35 million under the revolver, which were used with cash on hand to finance the acquisition and to refinance debt under the company’s previous credit agreement dated Sept. 29, 2014 with Wells Fargo.

Wells Fargo Securities, LLC acted as lead arranger and bookrunner; Wells Fargo Bank, NA as administrative agent; and Bank of the West and MUFG Union Bank NA as co-documentation agents.

Initial interest is Libor plus 200 basis points. It can range from Libor plus 150 bps to Libor plus 225 bps, and the revolver’s commitment fee ranges from 25 bps to 45 bps, depending on the company’s leverage ratio.

The revolver has a $2.5 million sublimit for letters of credit and a $10 million sublimit for swingline loans.

DTA may request up to $50 million of additional term loans or revolver increases.

The credit agreement matures Oct. 1, 2020.

Proceeds will also be used to finance ongoing working capital requirements and for other general corporate purposes.

DTS granted the lenders a first-priority security interest in 100% of the equity interests of certain domestic subsidiaries, up to 65% of the voting equity interests and 100% of the non-voting equity interests of certain foreign subsidiaries, all their assets and all of their products and proceeds.

DTS makes high-definition audio solutions and audio enhancement technologies. iBiquity Digital is the developer of digital HD radio technology for AM/FM audio and data broadcasting. They are based in Calabasas, Calif., and Columbia, Md., respectively.

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