Say “Bub-Bye”, Hercules?!

On a train — but Mattersight just 8-K’ed a new $20 million lending facility. Hercules is… out!

Details soon. There also Adjusted EBITDA covenants — more on those tomorrow. Out to dinner, now… back late.

From the SEC filing — just now:

Year to Date

Period Ending

Minimum Total Revenue
June 30, 2017 $18,319,002
September 30, 2017 $28,168,987

 

Trailing Twelve-Month

Period Ending

Minimum Total Revenue
December 31, 2017 $39,542,625
March 31, 2018 $41,811,956
June 30, 2018 $44,332,178
September 30, 2018 $47,349,202
December 31, 2018 $50,830,431
Last day of each month of each Fiscal Quarter thereafter 85% of budgeted revenue, as determined by Lender in its reasonable discretion based upon the projections for such Fiscal Year delivered pursuant to and in accordance with Section 10.1.8.  Notwithstanding the percentage noted above, Lender shall have discretion to reasonably set the covenant level to plan consistent with the historical levels but in no event shall the covenant levels be less than the prior tested period.

Year to Date

Period Ending

Minimum Total Revenue
June 30, 2017 $18,319,002
September 30, 2017 $28,168,987

 

Trailing Twelve-Month

Period Ending

Minimum Total Revenue
December 31, 2017 $39,542,625
March 31, 2018 $41,811,956
June 30, 2018 $44,332,178
September 30, 2018 $47,349,202
December 31, 2018 $50,830,431
Last day of each month of each Fiscal Quarter thereafter 85% of budgeted revenue, as determined by Lender in its reasonable discretion based upon the projections for such Fiscal Year delivered pursuant to and in accordance with Section 10.1.8.  Notwithstanding the percentage noted above, Lender shall have discretion to reasonably set the covenant level to plan consistent with the historical levels but in no event shall the covenant levels be less than the prior tested period.

 

On June 29, 2017, Mattersight Corporation (the “Company”) entered into a Loan and Security Agreement with The PrivateBank and Trust Company (the “Loan Agreement”). The Loan Agreement provides for a $20,000,000 revolving line of credit maturing in 2020 (the “Credit Facility”) and is secured by a security interest in the Company’s accounts receivable, equipment, inventory, cash, deposit accounts, securities, and all other investment property, supporting obligations, financial assets, other personal property, intellectual property rights and other personal property. The Company, subject to certain limits and restrictions, may from time to time request the issuance of letters of credit under the Loan Agreement.

On June 29, 2017, the Company used the proceeds of loans advanced under the Loan Agreement to repay in full the principal balance and accrued and unpaid interest outstanding under the Company’s prior credit facility with Hercules Capital, Inc., in an amount equal to $23,827,058.46, comprised of outstanding principal (including interest paid in kind) in the amount of $22,500,000 and accrued interest, fees and expenses in the amount of $1,327,058 (which includes a prepayment charge in the amount of $688,505).

The principal amount outstanding under the Loan Agreement will accrue interest at a floating annual rate equal to 1 month, 2 month or 3 month LIBOR (as selected by the Company) plus 4.50%, payable monthly. In addition, the Company will pay a non-use fee on the Credit Facility of 25 basis points (0.25%) per annum of the average unused portion of the Credit Facility. The amount the Company may borrow under the Credit Facility is limited to five times the Company’s monthly recurring revenue (as determined in accordance with the terms and conditions set forth in the Loan Agreement), multiplied by a dynamic churn factor that is based upon the ratio of recurring revenue retained in the prior twelve month period relative to the total amount of recurring revenue at the beginning of the period.

The Loan Agreement imposes various restrictions on the Company, including usual and customary limitations on the ability of the Company to incur debt and to grant liens upon its assets, prohibits certain consolidations, mergers, and sales and transfers of assets by the Company and requires the Company to comply with total revenue and EBITDA (as adjusted in accordance with the Loan Agreement) targets. The Loan Agreement includes usual and customary events of default (with customary grace periods, as applicable) and provides that, upon the occurrence of an event of default, payment of all amounts payable under the Loan Agreement may be accelerated and/or the lenders’ commitments may be terminated. In addition, upon the occurrence of certain insolvency or bankruptcy related events of default, all amounts payable under the Loan Agreement will automatically become immediately due and payable, and the lenders’ commitments will automatically terminate….

Wow. Another train wreck of re-fi/borrowing — at over 10 per cent per annum?!

Kick that can down the alley guys, if you like… but it is going to come due, eventually.

But it means any equity offering will be in Q4 2017.

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3 thoughts on “Say “Bub-Bye”, Hercules?!”

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