By William Gullotti
Buffalo, N.Y., March 30 – Ribbon Communications Inc. privately placed approximately $55 million of series A preferred stock and warrants on March 28 in connection with a $75 million paydown under its recently amended credit facility, according to an 8-K filing with the Securities and Exchange Commission.
Ribbon issued 55,000 shares of series A preferred stock due 2025, along with warrants to purchase approximately 4.86 million shares of common stock, in the placement. According to appended documentation, the initial number of authorized shares of the Rule 144A-compliant preferred stock are 63,250.
There is an additional securities option granted to B. Riley Securities, Inc., exercisable within 30 days, to purchase an additional $8,002,500 of the series A preferred stock and warrants.
Each share of series A preferred stock was sold at a price of $970 per share. Holders of the preferreds will be entitled to receive cumulative dividends, at a rate of 9.25% per annum for the first year, 9.75% per annum for the second and 12% per annum for the third and thereafter.
Preferred dividends will be payable (i) in-kind from the closing date until the first anniversary of the closing date, (ii) on or after the first anniversary but prior to the second anniversary, in kind or in cash, at the company’s option, and (iii) after the second anniversary, in cash.
In the event that the company does not declare and pay the full amount of dividends in cash, the dividend base amount for the preferred stock will automatically increase at the above dividend rate, on a compounding basis.
The preferreds have one year of call protection, after which they will be optionally redeemable in whole or in part. Starting March 30, 2024, the redemption price will start at 103; it step down to 102 one year later.
At maturity, the preferreds are subject to mandatory redemption at 102.
The warrant exercise price of $3.77 per share represents a 15% premium to the two-day volume-weighted average price of Ribbon’s common stock for March 27 and March 28. The warrants are immediately exercisable and expire after four years.
The placement agent for the preferreds was B. Riley Securities. American Stock Transfer & Trust Co., LLC was the warrant agent.
The approximately $53.4 million of gross proceeds from the placement was used, together with cash on hand and additional funds received from the sale of its fixed rate interest rate swap, to prepay $75 million of the principal amount outstanding on the term loan A from its recently amended senior secured credit agreement.
Ribbon Communications is a Westford, Mass.-based security and software solutions company.
| Issuer: | Ribbon Communications Inc.
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| Amount: | $55 million
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| Gross proceeds: | $53.4 million
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| Greenshoe: | $8,002,500 (only exercisable by B Riley)
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| Placement date: | March 28
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| Distribution: | Private placement
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| Series A preferred stock
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| Issue: | Series A preferred stock
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| Maturity: | Sept. 30, 2025
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| Dividends: | 9.25% for first year, 9.75% for the second, 12% for the third and thereafter; paid-in-kind for first year, in-kind or cash the second, cash thereafter; subject to increase and compounding upon failure to declare and pay in full
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| Call features: | Non-callable for first year; optionally, in whole or in part, at 103 starting March 30, 2024, stepping down to 102 one year later; mandatory redemption at 102 at maturity
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| Change of control puts: | At 103 until March 30, 2025, at 102 thereafter
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| Placement agent: | B. Riley Securities, Inc.
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| Distribution: | Rule 144A
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| Warrants
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| Issue: | Warrants
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| Tenor: | Four years
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| Warrants: | For 4,259,302 shares
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| Warrant exercise price: | $3.77
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| Warrant expiration: | March 30, 2027
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| Warrant agent: | American Stock Transfer & Trust Co., LLC
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