Mitel releases details on proposed $700 million credit facility

By Sara Rosenberg

New York, March 3 – Mitel Networks Corp. disclosed in an 8-K filed with the Securities and Exchange Commission on Tuesday that its proposed $700 million senior secured credit facility consists of a $50 million five-year revolver and a $650 million seven-year first-lien term loan.

Pricing on the revolver and the term loan is expected at Libor plus 450 basis points, with the revolver having one 25 bps step-down based on consolidated total net leverage.

The revolver has no Libor floor and the term loan has a 1% Libor floor, the filing said.

Also, the revolver has a 50 bps unused fee, with a step-down to 37.5 bps based on consolidated total net leverage.

The term loan is expected to have 101 soft call protection for six months and amortization of 1% per annum.

Bank of America Merrill Lynch and Credit Suisse Securities (USA) LLC are the joint lead arrangers and bookrunners on the deal.

Proceeds will be used with cash on hand to fund the acquisition of Mavenir Systems Inc. and refinance existing credit facilities at both companies.

Under the agreement, Mavenir stockholders will be entitled to elect to receive either all-cash or all-stock consideration for each share of Mavenir common stock, subject to proration, in either case with a value of $11.08 plus 0.675 of a Mitel common share, or $17.94 based on the closing price of a Mitel common share on Feb. 27.

The cash and stock deal is valued at about $560 million.

Closing is expected in the second quarter, subject to the tender of a majority of Mavenir’s common stock shares, regulatory and stock exchange approvals and other customary conditions.

At closing, net leverage ratio will be about 3.2 times trailing adjusted EBITDA with rapid deleveraging expected in the following year given expected strong cash flow generation.

Mitel is a Kanata, Ont.-based provider of cloud- and premises-based unified communications software solutions. Mavenir is a Richardson, Texas-based provider of software-based networking solutions for mobile carriers.

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