Harmonic gets $120 million secured revolver, $40 million term loan

By Marisa Wong

Los Angeles, Dec. 21 – Harmonic Inc. entered into a credit agreement on Dec. 21 with Citibank, NA as administrative agent for a secured revolving loan facility totaling up to $120 million and a secured delayed term loan facility totaling up to $40 million, according to an 8-K filing with the Securities and Exchange Commission.

The revolver includes a $10 million sublimit for the issuance of letters of credit.

Citibank, NA, JPMorgan and Wells Fargo Securities, LLC are the joint lead arrangers, with Citibank as bookrunner.

The credit agreement refinances and replaces the company’s existing credit agreement dated Dec. 19, 2019 with JPMorgan Chase Bank, NA as lender. As of Dec. 21, there were no loans and about $180,000 of letters of credit outstanding under the prior agreement.

Proceeds of loans under the new revolver may be used for general corporate purposes. To the extent drawn, the proceeds of the new term loans must be used to repurchase, redeem, acquire or otherwise settle the company’s 2% convertible senior notes due 2024.

The company may borrow term loans in up to three drawings during the period from the closing date through Sept. 1, 2024, on which date any undrawn commitments under the term facility expire.

The revolver and term loan mature on Dec. 21, 2028.

The credit agreement permits the company to increase the commitments under the revolver or establish one or more new term loan commitments in an aggregate principal amount for all such incremental facilities of up to $100 million plus an additional amount that would not cause the company’s consolidated net leverage ratio to exceed, on a pro forma basis, 2.5 to 1.0.

On the last day of each fiscal quarter, beginning Dec. 31, 2024, the principal amount of any term loans will be repaid in quarterly installments equal to 1.25% of the principal amount outstanding as of Sept. 1, 2024, increasing to 1.875% beginning Dec. 31, 2025 and to 2.5% beginning Dec. 31, 2027.

The term loans are also subject to mandatory prepayment with proceeds of certain extraordinary receipts and dispositions, including 50% of net cash proceeds from a sale of the company’s video business if, on a pro forma basis, its consolidated net leverage ratio exceeds 3.0 to 1.0.

Loans under the revolver and term loan will bear interest at adjusted term SOFR plus a margin of 200 basis points to 275 bps. The applicable margin in each case is determined based on the company’s consolidated net leverage ratio.

The company is required to maintain compliance with a maximum consolidated net leverage ratio and a minimum fixed-charge coverage ratio.

Harmonic is a San Jose, Calif.-based technology company that develops and markets video routing, server and storage products for companies that produce, process and distribute video content for television and the internet.

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