Safeguard Scientifics Inc. and some of its subsidiaries entered into an agreement to change certain provisions in its credit facility with HPS Investment Partners LLC and other lenders.
Under the amended agreement, Safeguard can now borrow up to $100 million, up from the prior $75 million. The loan consists of a first-lien loan in the principal amount of $85 million and a first-lien revolving loan in the principal amount of up to $15 million. About $50 million in first-lien loan was outstanding prior to the amendment and $35 million was drawn in connection with the consummation of the amendment.
The company can borrow the revolving loan until Dec. 30.
The amendment agreement also requires Safeguard to pay HPS Investment Partners a closing fee of $625,000 and an amendment fee of $750,000.
Additionally, if the aggregate amount of Safeguard's cash or cash equivalents exceeds $50 million as of any quarter-end date, the company will be required to prepay outstanding principal amounts under the loan, plus any applicable interest and prepayment fees, in an amount equal to 100% of such excess.
The agreement also made changes to certain negative covenants. Safeguard is permitted to make deployments only to existing partner companies. The deployments, when combined with previous deployments in 2018, should not exceed $40 million in the aggregate.
The loan agreement also restricts Safeguard’s ability to repurchase its common shares or issue dividends until the loan is repaid in full.
The company is no longer required to maintain a specific tangible net worth.
Safeguard plans to pay in full and retire its 5.25% convertible senior debentures due May 15.
