Transaction expected to unlock more than $95 million of cash flow over next three years
LAS VEGAS, July 19, 2018 – Rimini Street, Inc. (Nasdaq: RMNI), a global provider of enterprise software products and services, and the leading third-party support provider for Oracle and SAP software products, today announced it has completed the $140 million refinancing of its credit facility (the "Refinancing") previously announced on June 18, 2018. Rimini Street stockholders approved the transaction on July 12, 2018.
As part of the Refinancing, a syndicate of investors participated in the private placement of $140 million of Series A convertible preferred stock and received 2,896,556 shares of common stock. The Refinancing is expected to reduce debt related costs that would have been incurred under the previous credit facility by more than $95 million over the next three years, free up cash flow for investment in growth and extend the expected "maturity" from June 2020 under the prior credit facility to July 2023, when the preferred equity may be redeemed by the holders if not already converted.
The Company used substantially all of the net proceeds from the Refinancing to repay in full the outstanding indebtedness and fees under its credit facility and terminated the credit facility. The aggregate cash payment to terminate the credit facility was $132.8 million and consisted of make-whole applicable premium of $7.3 million and an aggregate of $125.5 million for principal, accrued interest and fees.
The Series A convertible preferred stock issued in the Refinancing is subject to an original issuance discount of 5%, has a conversion price of $10.00 per common share (representing a 44% premium over the $6.95 closing price per common share on July 18, 2018), a cash dividend of 10% per annum and a payment-in-kind (PIK) dividend of 3% per annum. Rimini Street, under certain circumstances, may redeem for cash up to $80 million of the Series A convertible preferred stock within the initial three years, subject to make-whole dividends for that period, and after three years may redeem all of the preferred equity or force its conversion into common stock. Under certain circumstances, the investors may redeem their Series A preferred stock for secured promissory note obligations. Additional terms of the financing, including when the promissory notes may replace the preferred stock, can be found in the Company's SEC filings, including the Current Report on Form 8-K filed today.
"Rimini Street has been providing value-driven, innovative support solutions and exceptional service that meet the support service needs of enterprise software licensees worldwide for over 13 years," said Seth A. Ravin, Rimini Street CEO. "I am pleased that our investors overwhelmingly supported this $140 million Series A convertible preferred equity transaction, and the transaction was also approved unanimously by the disinterested directors of the Board. The Refinancing achieves one of our stated 2018 financial priorities by replacing our current credit facility with an equity instrument that provides the Company a significantly lower cost of capital, and more operational flexibility to invest for growth in new products, services and geographic expansion."
Cowen served as exclusive financial advisor and placement agent to Rimini Street. Gibson Dunn & Crutcher LLP acted as legal counsel to Rimini Street.