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Rimini Street Completes $90MM Financing; Fifth Third Bank Joins as Lender

July 22, 2021, 07:48 AM
Filed Under: Technology

Rimini Street closed on the previously announced $90 million five-year senior secured credit facility with approximately $88 million of the borrowings used for the redemption of the remaining Series A Preferred stock and the remainder of the borrowings for related transaction costs and other general corporate purposes. Loan funding and redemption of the Series A Preferred stock were completed on July 20, 2021.

Fifth Third Bank Joins as Lender

The previously announced credit agreement entered into with Capital One on July 2, 2021, for a total of $90 million was amended on July 20, 2021, to, among other things, add Fifth Third Bank as a lender providing $30 million, with Capital One as a lender providing the remaining $60 million of the $90 million Credit Facility. Both Capital One and Fifth Third Bank are top 15 U.S. banks as measured by total assets.

“We are pleased to partner alongside Capital One to support Rimini Street’s new financing package and build a relationship with a leading technology services provider,” said Glen Mastey, managing director, Fifth Third Bank Technology, Media and Telecom Banking.

Key Financing Terms

Loans made under the five-year Credit Facility will bear interest at LIBOR plus a margin ranging from 1.75% to 2.50%. The margin for the Credit Facility is subject to leverage-based step downs. The Credit Facility contains certain financial covenants, including maintenance of a minimum fixed charge coverage ratio, a total leverage ratio below a threshold and a minimum liquidity of $20 million in U.S. cash. Annual minimum principal amortization payments across the five-year term will be 5%, 5%, 7.5%, 7.5%, 10%, with the remaining balance due at the end of the term. The loans under the Credit Facility contain affirmative and negative covenants customary for transactions of this type and there is no prepayment premium during the term of the loan.

Transaction Benefits

When combining the financial impacts of this completed $90 million bank loan financing, the March 2021 Common stock offering, the previous Series A Preferred stock buybacks totaling $75 million completed from October 2020 – April 2021 and the buyback of the remaining Series A Preferred stock of approximately $88 million, the Company expects a first year savings under the new Credit Facility of approximately $24 million. The Company paid approximately $27 million in financing costs in 2020 and expects to reduce the annualized first-year costs under the new financing to approximately $3 million.

The combination of cash savings and a reduction in fully diluted shares of Common stock outstanding should yield a meaningful increase in earnings per share.

“We are pleased to close this transaction and have Fifth Third Bank join Capital One as a lender in this new financing,” said Seth A. Ravin, CEO and chairman of the board. “The full redemption of the remaining Series A Preferred stock using this new $90 million commercial bank financing achieves our long-stated goals of obtaining competitive market rates for capital, reducing financing costs and dividend obligations and providing operational flexibility that supports accelerating growth and capital return options.”

Transaction Advisors and Lenders

Cowen served as exclusive financial advisor, Capital One acted as sole lead arranger, bookrunner, agent and lender, Fifth Third Bank acted as lender, Baker McKenzie LLP acted as legal counsel to Rimini Street, Paul Hastings LLP acted as legal counsel to Capital One, National Association, and Stradling Yocca Carlson & Rauth LLP acted as legal counsel to Fifth Third Bank, National Association.

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