Upland Software, Inc. Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed on December 13, 2018, covering events occurring on December 12, 2018. Upland Software, Inc., an emerging growth company, announced the completion of the acquisition of Adestra Limited, a private company organized under the laws of England and Wales. The transaction was funded through an expansion of the Company's existing credit facility.
Key Financial Metrics and Capital Structure
- Acquisition Consideration: Total consideration of approximately $60.2 million, consisting of $56.0 million in cash at closing and a $4.2 million cash holdback payable in 12 months.
- Debt Facility Expansion: The credit facility was increased from $358.9 million to $400 million.
- Debt Composition: The expanded facility includes a $285 million outstanding term loan, a $30 million delayed draw term loan, a $30 million revolving loan, and a $55 million uncommitted accordion.
- Debt Levels: Gross debt outstanding increased from $223.9 million to $285.0 million following the draw of $61.1 million in new term debt.
- Net Debt: Approximately $265 million.
- Interest Rate: Maximum interest rate set at LIBOR + 400 basis points (currently 6.3%).
Material Changes Versus Prior Period
The primary material change is the significant increase in leverage to finance the Adestra acquisition. Gross debt increased by $61.1 million in a single transaction. The Company entered into a Ninth Amendment to its Credit Agreement to facilitate this expansion, altering the capital structure from a $358.9 million facility to a $400 million facility.
Outlook, Risks, and Contingencies
- Holdback Contingency: A portion of the purchase price ($4.2 million) is held back for 12 months and is subject to reduction for indemnification claims.
- Financial Reporting: Financial statements of the acquired business and pro forma financial statements are not included in this filing and will be filed within 71 calendar days.
- Debt Servicing: The Company now carries a higher debt load with a variable interest rate tied to LIBOR, increasing exposure to interest rate fluctuations.
Key Facts for Investor Verification
- Verify the integration timeline and expected synergies of the Adestra acquisition.
- Monitor the upcoming 10-K filing for the full text of the Ninth Amendment to the Credit Agreement and detailed debt covenants.
- Review the pro forma financial statements (due within 71 days) to assess the impact of the acquisition on earnings and cash flow.
- Track the status of the $4.2 million holdback and any potential indemnification claims over the next 12 months.