Digital security and privacy software group agrees $500m of new banking facilities
Kape Technologies has agreed new bank facilities worth $500m in total, which it says will save it millions in savings on its previous arrangement.
The Isle of Man-based digital security and privacy software business struck the financing deal with its existing lenders, Bank of Ireland, Barclays, Citizens Bank, BNP Paribas, Citi Commercial Bank, and Leumi Bank, and two new banks, HSBC and Credit Suisse, who will join the enlarged syndicate.
AIM-listed Kape said the new deal will immediately realise approximately $20m in net debt reduction, approximately $8m of savings on financing costs and provide long term financing to support Kape’s expansion.
The new debt facilities comprise a $275m senior secured term facility, a $150m revolving credit facility and an uncommitted $75m facility.
The new debt facilities will replace all Kape’s existing loan facilities, including the deferred consideration facility arrangements put in place with TS Next Level Investments, an affiliate of Unikmind Holdings, the company’s majority shareholder, at the time of the acquisition of ExpressVPN.
As well as providing long term financing to better support Kape’s ambitious growth plans, the new debt facilities will allow the company to exercise its option under the prepayment agreement, announced on September 12, 2022, to prepay at a discount the $345m of deferred consideration for the acquisition of ExpressVPN.
The prepayment is expected to result in an immediate reduction in the company’s net debt of approximately $20m. In addition, the termination of the deferred consideration facility and the associated commitment fee, which accrues at 3.50% per annum, is expected to result in immediate savings of approximately $8m.
The new debt facilities have a four-year term. Funding is expected to take place this week. The term facility is subject to 10% annual amortisation and carries an opening margin of 2.75% above the applicable reference rate per annum. The margin will vary over the term of the facilities based on the group’s adjusted leverage each quarter.
Following the refinancing, the group’s adjusted leverage expected by the end of 2022 will be below 1x.
Oded Baskind, chief financial officer of Kape, said: “We are pleased to have received such strong support from our existing partners, as well as the new banks joining the syndicate – this is a strong vote of confidence in Kape’s management, business model and growth trajectory.
“The new debt facilities will provide the business with long term financing, transforming Kape’s ability to further support our ambitious growth plans as well as immediately realise approximately $20m in net debt reduction and approximately $8m of savings on financing costs. The new debt facilities will also provide additional firepower to continue our profitable growth path in the digital privacy and security space.”
In September this year, Kape reported record six month figures.
During the six months to June 30, 2022, Kape achieved revenues of $302.396m, up from $95.502m a year ago, while pre-tax profits of $46.2m compared with $7.5m in 2021.
In the same reporting period the group had cash of $62.9m, compared with $27m at December 31, 2021, net assets of $917.3m (December 31, 2021: $863.5m), and net debt of $391.9m (December 31, 2021: $457.5m).
There was strong growth in recurring revenues to $268m, an increase of 353.5%.