Digi International gets $250 million revolver to replace term B

By Wendy Van Sickle

Columbus, Ohio, Dec. 11 – Digi International Inc. entered into a new $250 million senior secured revolving credit facility, replacing its existing term B loan, which had a $215 million balance, according to a news release and an 8-K filing with the Securities and Exchange Commission.

BMO Capital Markets Corp., BofA Securities, Inc. and MUFG Bank, Ltd. are the joint lead arrangers and joint bookrunners. BMO Bank, NA is the administrative agent.

The new revolver has an accordion feature that provides for additional borrowing capacity of the greater of $95 million or 100% of trailing 12-month adjusted EBITDA.

Initial interest is SOFR plus a margin of 250 basis points. The margin can range from 175 bps to 275 bps, depending on total net leverage ratio. The commitment fee ranges from 20 bps to 35 bps, also based on total net leverage ratio.

Digi said it expects to save 300 bps on interest annually for savings of about $4 million in interest payments over the first year.

“After taking into account the costs to put this facility in place, we expect to see positive net cash from the transaction over the next three months. This facility will provide us with more flexibility to support our growth initiatives, both organically and inorganically. We remain committed to aggressively paying down this debt and delivering strong financial results in FY24,” Jamie Loch, executive vice president, chief financial officer and treasurer of Digi, said in the release.

The credit agreement requires Digi to maintain a minimum interest coverage ratio of 3x and a total net leverage ratio not to exceed 3x, with certain exceptions for a covenant holiday of up to 3.5x after certain material acquisitions.

Subject to the terms of the new facility, Digi may use borrowings for working capital, capital expenditures, restricted payments, acquisitions and other general corporate purposes.

Digi is a Hopkins, Minn.-based provider of internet of things (IoT) connectivity products, software and services. Opengear is a Piscataway, N.J.-based provider of secure IT infrastructure products and software.

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