Rocket Fuel enters into $110 million restated term loan, revolver

By Marisa Wong

Madison, Wis., Jan. 7 – Rocket Fuel Inc. entered into a second amended and restated revolving credit and term loan agreement on Dec. 31 for a $110 million facility, according to an 8-K filing with the Securities and Exchange Commission.

Comerica Bank and Silicon Valley Bank are the joint lead arrangers and joint bookrunners, with Comerica Bank as administrative agent.

The facility amends and restates the company’s existing amended and restated loan and security agreement dated Dec. 20, 2013 with Comerica Bank.

The newly restated facility consists of a $30 million term loan and an $80 million secured accounts receivable formula-based revolving credit facility, with a $12 million subfacility for the issuance of letters of credit and a $2.5 million subfacility for swingline loans.

The facility contains an increase option for up to a total of $25 million in additional revolving commitments.

As of Dec. 31, the company had $30 million of outstanding term loans, $40 million of outstanding revolving loans and undrawn letters of credit in an aggregate principal amount of $6 million.

The company used a portion of the proceeds of the initial extension of credit to refinance $62 million of revolving loans and term loans under the existing loan facility.

Revolving loans may be advanced based on a borrowing base equal to 85% of the value of eligible accounts. The borrowing base is subject to reserves and eligibility criteria.

Availability under the accounts receivable formula-based revolver can also be used to issue letters of credit or to borrow swingline loans. If at any time the aggregate principal amount of the revolving loans and swingline loans outstanding plus the face amount of undrawn letters of credit exceeds the borrowing base then in effect, the company must make a prepayment in an amount sufficient to eliminate that excess.

The term loan is subject to some prepayment conditions.

Loan proceeds may be used for general corporate purposes.

Revolving loans bear interest at Libor plus a spread of 262.5 basis points to 312.5 bps. Term loans bear interest at Libor plus a spread of 350 bps to 400 bps. In each case, the spread is based on the cash reflected on the company’s balance sheet for the preceding fiscal quarter, plus an amount equal to the average unused portion of the revolving credit commitments during that fiscal quarter.

Term loans will be repaid in quarterly principal installments of $1.5 million, with any remaining amounts due on Dec. 31, 2019. Revolving loans are due on Dec. 31, 2017.

In addition, the facility requires the company to comply with a minimum EBITDA covenant through the fiscal quarter ending Sept. 30, 2015 and a minimum consolidated fixed charge coverage ratio for the quarters ending after that. The company must also maintain at least $30 million of cash on deposit with the lenders and maintain a minimum liquidity ratio.

The borrower is a Redwood City, Calif., company that uses artificial intelligence to improve digital advertising.

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