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KORE refinances $300m loan
- November 20, 2023
- Steve Rogerson
IoT firm KORE has completed previously announced transactions to refinance its $300m loan with a new $185m five-year loan from Whitehorse Capital and a $150m investment from Searchlight Capital Partners.
As part of the transaction, Searchlight has appointed two members to the KORE’s board of directors. These are David Fuller, operating partner, and Andrew Frey, partner. They bring deep expertise in the communications and technology sectors.
Prior to joining Searchlight, Fuller was president of Rogers Wireless and held a number of executive roles at Telus. Frey has invested in the communications, media and technology sectors for the past 20 years, and is currently involved with Searchlight’s investments in Ziply Fiber, Consolidated Communications Holdings and Mitel Networks.
The transactions are:
- Reduce KORE’s debt by almost $120m
- Extend KORE’s debt maturity, with no material debt maturities until the second half of 2028
- Reduce cash interest expenses by approximately $14m per year, positioning KORE to be free cash flow positive
- Add approximately $15m in cash to KORE’s balance sheet, providing flexibility to continue pursuing accretive M&A opportunities
“Over the past several months, we have focused on reducing our debt and strengthening the company’s balance sheet,” said Romil Bahl, CEO of KORE. “We are pleased to have supportive partners in Whitehorse and Searchlight, who have provided us capital to achieve the company’s objectives. It is an exciting time for KORE, as we have significantly improved our balance sheet by reducing our total debt, extending our debt maturities, and, importantly, increasing the company’s ongoing cash generation and cash position, resulting in increased flexibility.”
He said these actions, combined with the involvement of a knowledgeable communications investor in Searchlight, would help KORE capitalise on the many exciting growth opportunities in the markets and would enhance KORE’s ability to create long-term shareholder value.”
Searchlight has made a $150m investment in the form of non-convertible preferred stock with a ten-year maturity and 13% per annum dividend rate. Additionally, an affiliate of Searchlight has been issued penny warrants to purchase 11.8m shares of common stock. Proceeds from the Searchlight investment were used for debt repayment, transaction fees and expenses, resulting in KORE having additional cash for general corporate purposes.
“Searchlight has been looking for the right opportunity to invest in the IoT market, a high-growth segment of communications with increasing strategic importance as 5G networks become more prevalent globally,” said Frey. “In KORE, we believe we have found a best-in-class operating business with an experienced management team. KORE has a strong competitive position in IoT and many exciting organic and acquisition-related growth opportunities. We look forward to working with Romil and his team, as well as the company’s board of directors, to drive long-term value creation for all stakeholders.”
With the closing of the transactions, KORE has reduced its term loan debt from approximately $300m to $185m.
“KORE has deleveraged, strengthened its balance sheet, and increased cash flow flexibility,” said Bahl. “KORE is now in a better position from both a financial and growth perspective than at any other time since the company went public over two years ago. Our strengthened balance sheet, 80% recurring revenue, and growing global sales pipeline position KORE for growth and tremendous long-term shareholder value creation over the decade of IoT.”
KORE (www.korewireless.com) delivers mission-critical IoT services. It empowers organisations of all sizes to improve operational and business results by simplifying the complexity of IoT.
Searchlight (www.searchlightcap.com) is a global private investment firm with approximately $12bn in assets under management and offices in New York, London, Toronto and Miami. Searchlight seeks to invest in businesses where its long-term capital and support accelerate value creation for all stakeholders.