Term Loans and Revolving Credit Facility
In January 2020, Signify announced that it had signed new committed financing facilities to replace its former term loans structure of EUR 740 million and USD 500 million, and revolving credit facility of EUR 500 million obtained at the time of the IPO which were due to expire in May 2021. In line with our overall policy to deleverage our balance sheet Signify announced in September 2020 the repayment of EUR 350 million of the terms loans under the new committed financing facilities.
As of September 2020 following the repayment of EUR 350 million of debt the committed term loan structure consists of EUR 50 million and USD 275 million with a maturity of three years (January 2023) and EUR 340 million and USD 225 million with a maturity of five years (January 2025).
The new committed EUR 500 million multi-currency revolving credit facility (RCF) has a maturity of five years (January 2025), with the option to extend it twice by one year at the end of the first and second anniversary. These new facilities have similar terms to the previous facilities. To date, Signify did not have any amounts drawn under the revolving credit facility.
The term loans and RCF agreement include a financial covenant providing that Signify maintains a net leverage ratio of no greater than 3.5x net debt / last twelve months reported EBITDA. The net leverage ratio may temporarily increase to 4.0x net debt / last twelve months reported EBITDA within 12 months of the closing (March 2, 2020) of the Cooper Lighting Solutions acquisition or other material acquisitions. The net leverage ratio will be tested on 30 June and 31 December each year. The covenant does not apply if the company has at least one investment grade rating, which it currently has (please see below).