CAMPBELL, Calif.–(BUSINESS WIRE)–8×8, Inc. (NYSE: EGHT) (the “Company” or “8×8”), a leading provider of integrated cloud communications platforms, today announced a new secured term loan facility of ranking of $250 million in a transaction led by Francisco Partners. Under the credit agreement, the Company intends to use the facility to fund the cash portion of an exchange in principal amount of approximately $404 million of the 0.50 % of the Company due 2024 and the concurrent repurchase of approximately $60 million of common stock of the Company.
“We are delighted to partner with 8×8 in providing a customized capital solution,” said Scott Eisenberg, Head of Credit and Structured Solutions at Francisco Partners. “8×8 is a leader in the large and growing cloud communications market and we look forward to supporting management by helping to advance their vision for the business and drive value for all stakeholders.
“Francisco Partners’ equity commitment to 8×8 recognizes the opportunity and importance of our XCaaS vision to deliver a single-vendor cloud communication and contact center solution that empowers workers in today’s hybrid workplaces today,” said Samuel Wilson, CFO of 8×8. “By simultaneously executing a term loan, convertible debt exchange and share buyback, we are extending the maturity of over 80% of our 2024 convertible debt while limiting the potential dilutive impact on existing shareholders. Our continued focus on operational efficiency was a key factor in negotiating favorable terms for these transactions. Consistent with the increased focus on profitability and cash flow generation that we communicated with our fiscal first quarter earnings release, we reiterate our recently communicated objectives of maintaining positive operating cash flow and generating operating profit on a non-GAAP basis.
Term Loan Facility Details
The Term Loan Facility will mature in July 2027. Advances under the Term Loan Facility will bear interest at an annual rate equal to the Guaranteed Term Overnight Funding Rate (SOFR), plus a margin of 6.50%, subject to a floor of 1.00% and a credit spread adjustment of 0.10%. Wilmington Savings Fund Society, FSB will act as administrative agent, with certain affiliates of Francisco Partners as lenders (the “Credit Agreement”).
Along with the term loan facility, the Company also issued exercisable detachable warrants for an aggregate of 3.1 million shares of common stock of the Company to Francisco Partners and its affiliates. The warrants have a term of five years and an exercise price equal to $7.15, which represents a premium of 27.5% over the closing price of the common shares of the Company on August 3, 2022, date of pricing.
Loans under the Credit Agreement contain customary financial covenants as well as positive and negative covenants customary for transactions of this type, including minimum liquidity and limitations on indebtedness, liens, investments , dividends, disposal of assets, change of activity and transactions with affiliated companies. .
The Credit Agreement will be secured by certain of the Company’s wholly-owned subsidiaries, other than intangible subsidiaries and other customary exceptions, and secured by a perfected security interest in substantially all of the Company’s tangible and intangible assets, as well as almost all of the tangible and intangible assets of the guarantors.
Initial funding of the loans under the credit agreement is expected to occur on August 10, 2022, subject to customary closing conditions.
J. Wood Capital Advisors LLC acted as financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisor to the Company in connection with the transaction.
About 8×8 Inc.
8×8, Inc. (NYSE: EGHT) is transforming the future of enterprise communications as the leading software-as-a-service provider of 8×8 XCaaS™ (eXperience Communications as a Service™), an integrated contact center, communications voice, video, chat and API built on a global cloud communication platform. 8×8 uniquely breaks down the silos between Unified Communications as a Service (UCaaS) and Contact Center as a Service (CCaaS) to meet the communication needs of all employees globally as they work together to deliver differentiated customer experiences. For more information, visit www.8×8.com, or follow 8×8 on LinkedIn, Twitter and Facebook.
8×8®, 8×8 XCaaS™, eXperience Communications as a Service™, eXperience Communications Platform™ are registered trademarks of 8×8, Inc.
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934. Any statements that are not historical facts may be considered forward-looking. statements. For example, words such as “may”, “will”, “should”, “estimate”, “predict”, “potential”, “continue”, “strategy”, “believe”, “anticipate”, “plan” , “expects, “intends” and similar expressions are intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, the Company’s ability to complete the foregoing transactions within the time periods described, with the terms anticipated, or and whether the Company remains positive and profitable on a non-GAAP basis. Actual results could differ materially from those projected in the forward-looking statements depending on a variety of factors. These include that the closing of transactions is subject to For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in the reports. of the company on Forms 10-K and 10-Q, as well as other reports that 8×8 files from time to time with the Securities and Exchange Commission. All forward-looking statements are qualified in their entirety by this cautionary statement, and 8×8 undertakes no obligation to publicly update any forward-looking statement for any reason, except as required by law, even if new information become available or if other events occur in the future.