Debtholders

The Company completed a comprehensive debt refinancing in early August 2018. CEVA raised EUR300 million of 5.25% Senior Secured Notes due 2025, a US$475 million Senior Secured Term Loan B (TLB) due 2025 and a US$585 million Senior Secured Revolving Credit and Ancillary Facility due 2023. CEVA repaid or redeemed most of its previous credit facilities and notes. Through the IPO and the refinancing, the Company raised approximately US$1.2 billion in equity and approximately US$1.4 billion in new debt facilities. CEVA achieved longer maturities, more flexibility, enhanced liquidity and lower interest cost through the deleveraging and the refinancing.

With a change of control being a possible consequence of the Public Tender Offer launched by CMA CGM on CEVA shares, the following actions have been undertaken or prepared with CMA CGM to secure the financing of CEVA:

  • with respect to the Senior Secured Notes and the Term Loan B (TLB), CMA CGM has entered into a commitment letter with certain banks, which agreed to underwrite an amount of up to US$825 million; In February 2019, a new TLB to refinance its existing US$475 million TLB due August 2025 has been finalized and CEVA is considering any options to refinance its bonds;
  • with respect to the Revolving Credit Facility, CEVA has received waivers from the majority of the lenders providing that they agree to the Change of Control Event provided it occurs on or before 31 December, 2019;
  • with respect to the European Facility, it has been amended in order not to trigger a Change of Control.

 

  • Deleveraging to current levels is transformative for CEVA
    • Very positive reactions, will create opportunities and accelerate growth
    • Company would have been cash flow positive in 2017, pro forma for new capital structure
  • CEVA has a strong strategic platform (service portfolio, geographic footprint, competencies) – priority is to develop business organically; we have flexibility to do selective, small M&A at later stage to strengthen in certain areas
  • Target to pay a first small dividend in FY19 for FY18, larger payouts only once further delivered
  • Committed to further deleveraging towards 1.5x-2.0x Net debt / Adjusted EBITDA over medium term

 

Facility

Amount
($ equivalent)

Currency

Maturity

Rates

 Term Loan B

475

USD

2025

L+375
(leverage step down to L+350)

 Notes

350 
(EUR 300)

EUR

2025

5.25%

 Revolving 
 Credit Facility

585

multi currency

2023

L+237.5

 ABS/ABL (Existing)

400

multi currency

2020

TBD
(Existing: L+175 to L-250)

 

Comments

  • One-tier senior secured structure (except for ABS/ABL)
  • Instruments have received same BB- / B1 credit rating as company
  • Have achieved much lower interest rates, pleased with outcome
  • >$100 m Finance expense savings expected vs. old capital structure, subject to base rates, achieved margins and drawings

 

The prospectus can be downloaded here >

 

CEVA Credit Update Investor Call - 9 April 2019

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