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Elimination of restrictive borrowing facility provides for more efficient debt capacity and cash management
Inseego Corp. (NASDAQ:INSG) (the "Company"), a technology leader in 5G mobile and fixed wireless solutions for mobile network operators, Fortune 500 enterprises, and SMBs, announced today that as a result of its improving liquidity position and financial results, the Company exercised its right to voluntarily pay-off and terminate its asset-backed loan facility (the "ABL Facility") with Siena Lending Group ("Siena").
On a monthly basis, the Company has been required by the terms of the ABL Facility to pay fees and interest expense on a principal amount of $8.5 million, irrespective of the amount of funds actually borrowed by the Company under the ABL Facility. During 2023, for example, the Company incurred interest expense and fees related to the ABL Facility of $1.9 million.
With the pay-off and termination of the ABL Facility, the Company will have no loan balance outstanding and incur no interest expense under the facility going forward; further, the lien on all of the Company's assets associated with the ABL Facility will be released.
As a result of the Company's improvements in revenue growth and financial performance, and the favorable trend in cash management, the Company believes it has the needed liquidity going forward to meet its working capital needs.
During the week of April 15, 2024, the Company notified Siena and paid the outstanding balance and related termination fees on the ABL Facility of approximately $3.0 million. The Company will also be required to pay an exit fee in the aggregate amount of $400,000 to South Ocean Funding, LLC and North Sound Ventures, LP (collectively, the "Participants") as a result of the early redemption of the Participants' $4.0 million last-out subordinated participation interest in the Loan and Security Agreement pursuant to a Participation Agreement between the Participants and Siena Lending Group. South Ocean Funding, LLC is an affiliate of Golden Harbor, Ltd. and North Sound Ventures, LP is an affiliate of North Sound Management, Inc. As of the date hereof, each of Golden Harbor, Ltd. and North Sound Management, Inc. are beneficial owners of in excess of 5% of the Company's outstanding common stock. James Avery, a member of the Company's Board of Directors, currently serves as Senior Managing Director of Tavistock Group, an affiliate of South Ocean Funding, LLC.
Posted In: INSG
