RingCentral enters $200 million revolver, $400 million term loan

By Marisa Wong

Los Angeles, Feb. 15 – RingCentral, Inc. entered into a credit agreement on Feb. 14 with Bank of America, NA as administrative agent for a $200 million revolving loan facility and a $400 million delayed-draw term loan facility, according to an 8-K filing with the Securities and Exchange Commission.

The revolver includes a $25 million sublimit for the issuance of letters of credit.

Revolving commitments terminate on Feb. 14, 2028, subject to a springing maturity. If on any date that is 91 days prior to the final scheduled maturity date of any series of the company’s convertible notes due 2025 and 2026, that series of notes is in an aggregate principal amount outstanding that exceeds an amount equal to 50% of last 12 months EBITDA, the maturity date of the revolver will automatically be modified to be that date.

Term loans may be borrowed in up to four drawings during the period from the closing date of the credit agreement through Nov. 14, 2023, at which point undrawn commitments expire. All outstanding term loans are due and payable on Feb. 14, 2028, subject to the same springing maturity as the revolver.

The credit agreement permits the company to add one or more new revolving or term loan facilities or increase the commitments under the revolver or term loan in an aggregate principal amount for all such incremental facilities of up to (a) the greater of $378 million and 100% of last 12 months’ EBITDA plus (b) an amount that would not cause the secured net leverage ratio to exceed, on a pro forma basis, 2.00 to 1.00 plus (c) certain voluntary prepayments and commitment reductions.

Term loans must be repaid in equal quarterly installments in aggregate annual amounts equal to 5% of the original principal amount.

Borrowings under the revolver and term loan will bear interest at adjusted term SOFR plus a margin of between 200 basis points and 300 bps, based on the company’s total net leverage ratio.

The company is also required to pay a commitment fee on the daily unused amount of the revolver commitments ranging from 25 bps to 42.5 bps, depending upon the company’s total net leverage ratio.

In addition, the company is required to pay a ticking fee of 37.5 bps, increasing to 50 bps on Aug. 14, 2023, on the daily unused amount of the term loan commitments to, but excluding, the earlier of the funding date of the term loans and the termination date of that facility.

The credit agreement contains financial covenants that require compliance with a maximum total net leverage ratio and minimum interest coverage ratio.

Proceeds from revolving loans may be used for working capital and general corporate purposes. To the extent drawn, proceeds of term loans will be used to repurchase, repay, acquire or otherwise settle a portion of the company’s 0% convertible senior notes due 2025 or its 0% convertible senior notes due 2026.

RingCentral is a Belmont, Calif.-based cloud-based communications and collaboration software company.

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