AvidXchange enters credit agreement for reduced $75 million commitment

By Marisa Wong

Los Angeles, Jan. 4 – AvidXchange, Inc., a wholly owned subsidiary of AvidXchange Holdings, Inc., entered into a credit agreement on Dec. 29 with KeyBank NA as administrative agent and issuing lender and KeyBanc Capital Markets Inc. as joint lead arranger and bookrunner, according to an 8-K filed Wednesday with the Securities and Exchange Commission.

The credit agreement replaces the company’s credit agreement dated Oct. 1, 2019 with Sixth Street Specialty Lending, Inc. as administrative agent and KeyBank as one of the lenders, lead arrangers and bookrunners. The 2019 credit agreement had made available a facility in an aggregate amount of $163.5 million.

The new credit agreement currently makes available facilities in an aggregate amount of $75 million and consists of a $10 million five-year revolver and a $65 million five-year term loan.

Letters of credit may be issued under the new credit agreement, and availability under the revolver will be reduced by any outstanding letters of credit. As of closing, borrowing availability under the revolver is reduced by the then current amount of the letter of credit dated Oct. 1, 2019 and issued by KeyBank to secure the company’s obligation to make payments under the lease related to its headquarters building in Charlotte, N.C. The current amount of the letter of credit is about $6.1 million.

In addition, under the new credit agreement, the borrower may request an increase to the revolver or add an additional term loan by an aggregate amount (for all such increases) of up to $70 million.

Proceeds from the new term loan and corporate cash were used to pay in full all outstanding debt and expenses under the 2019 credit agreement, and the new revolver may be used to fund working capital and for general corporate purposes.

The maturity date for the new revolver and term loan is Dec. 29, 2027.

Interest is equal to daily simple SOFR or term SOFR plus an applicable margin. The applicable margin ranges between 250 basis points and 300 bps, plus a SOFR adjustment between 10 bps and 25 bps. The applicable margin fluctuates based on the ratio of debt under the company’s new credit agreement to its consolidated software revenue. The borrower may elect one-, three- or six-month interest periods in connection with term SOFR. Daily simple SOFR and term SOFR are subject to a 0.5% floor.

The principal amount of the term loan amortizes at a rate of 2.5% per year for the first two years and 5% for the last three years, payable in equal quarterly installments.

The credit agreement contains three financial covenants, measured on a consolidated basis: first, there must be liquidity that is more than the greater of $35 million and 35% of the total commitment amount; second, as of the end of each quarter, total revenue on a trailing four-quarter basis must be greater than the requirements set forth in the credit agreement; third, for each period of four consecutive quarters ending on Dec. 31, 2024 and at the end of each fiscal quarter after that, consolidated EBITDA must not be less than $10 million.

Under the 2019 credit agreement, the borrower and some of its subsidiaries were co-borrowers, with the parent company as the guarantor. Under the new agreement AvidXchange, Inc. is the only borrower, and the parent company and some subsidiaries of AvidXchange, Inc. are co-guarantors.

AvidXchange is an accounts payable automation software and payment services company.

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