Casa Systems TSA agreement pushes term loan B maturity to 2027

By William Gullotti

Buffalo, N.Y., May 9 – Casa Systems, Inc. entered into a transaction support agreement (TSA) with an ad hoc committee of lenders, representing about 60% of the roughly $223 million outstanding term loan B secured debt, on May 8, according to a press release and an 8-K filing with the Securities and Exchange Commission.

The TSA provides for, among other things, an exchange of $133.9 million of existing term loan B debt held by the consenting lenders for newly issued super-priority term loan B debt. The TSA also permits other holders that did not initially sign the agreement to execute a joinder to the TSA under certain conditions. Lenders executing joinders to the TSA will subsequently exchange their debt in the same manner as the initial signers.

The exchange functionally extends the maturity to Dec. 20, 2027 from Dec. 20, 2023. However, the new super-priority term loans will be subject to a springing maturity date of Dec. 20, 2025 if (i) the first-lien net leverage ratio exceeds a ratio to be agreed as of Sept. 30, 2025, (ii) the total net leverage ratio exceeds a ratio to be agreed as of Sept. 30, 2025 and (iii) a default or event of default has occurred and is continuing under the agreement. The springing maturity date may be waived by holders collectively owning or controlling at least 75% of the outstanding super-priority loans.

Casa further indicated that, at closing, it intends to repay $40 million of the super-priority debt using available cash on hand.

Subject to conditions, the super-priority agreement further permits additional incremental term loan facilities of up to $25 million.

The super-priority term loans are expected to bear interest at SOFR plus 650 basis points through Dec. 20, 2025. The margin will step up to 700 bps on July 1, 2024 and to 800 bps on Jan. 1, 2025 if, in each case, the outstanding principal amount exceeds $125 million. The margin jumps to 1,300 bps after Dec. 20, 2025.

Independent of timeframe, the adjusted SOFR rate itself is subject to a floor of 2%.

If the TSA is consummated, at closing, holders of the super-priority loans will also receive, on a pro rata basis in accordance with the amount of loans held, penny warrants exercisable for 10% of the fully diluted common stock of Casa. The percentage increases over time from 15% to up to 19.99% in the event the super-priority term loans remain outstanding after Dec. 31, 2023.

Sidley Austin LLP is serving as legal counsel to the company in connection with the transactions contemplated by the TSA. JPMorgan Chase Bank, NA is lead arranger for such transactions and is represented by Simpson Thacher & Bartlett LLP.

JPMorgan is also the administrative agent and collateral agent for the original term loan B agreement, signed Dec. 20, 2016, which will still mature as scheduled for any remaining balance.

Casa is a Delaware-incorporated cloud computing and broadband networking company with operations in over 70 countries.

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