Upland Software, Inc. - Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed on October 3, 2018, by Upland Software, Inc. (the "Company"), an emerging growth company incorporated in Delaware. The filing reports on the completion of an acquisition and a concurrent amendment to the Company's credit facility.
Key Financial Metrics and Transaction Details
- Acquisition: The Company acquired Rapide Communication LTD (doing business as Rant & Rave) for an aggregate consideration of approximately $65 million.
- Consideration Breakdown: Approximately $58.5 million paid in cash at closing (net of cash acquired) and a $6.5 million cash holdback payable in 12 months.
- Debt Expansion: The Company's credit facility was expanded from $258.7 million to $358.9 million.
- Debt Structure: The new facility includes a $223.9 million outstanding term loan, a $30 million delayed draw term loan, a $30 million revolving loan, and a $75 million uncommitted accordion.
- Debt Levels: Gross debt outstanding increased from $160.9 million to $223.9 million following the draw of $63.0 million in new term debt. Net debt is approximately $209 million.
- Interest Rate: The maximum interest rate was reduced to LIBOR + 400 basis points (currently 6.2%).
Material Changes Versus Prior Period
The primary material change is the significant increase in leverage to fund the acquisition of Rant & Rave. Gross debt increased by $63.0 million in a single transaction. Additionally, the Company secured favorable terms on its credit agreement, including a lower maximum interest rate and an adjusted net leverage ratio covenant allowing for higher funded indebtedness relative to EBITDA.
Outlook, Risks, and Unusual Items
The acquisition is intended to expand the Company's capabilities, though specific strategic commentary is limited in this filing. The transaction was funded entirely through the expanded credit facility. Pro forma financial statements and financial statements of the acquired business are not included in this filing but will be submitted within 71 calendar days. The $6.5 million holdback is subject to reduction for indemnification claims, representing a contingent liability.
Investor Verification Checklist
- Verify the pro forma financial impact of the acquisition once filed within the 71-day window.
- Review the full text of the Eighth Amendment to the Credit Agreement (Exhibit 10.1 to the upcoming 10-Q) for detailed covenant restrictions.
- Monitor the integration of Rant & Rave and the realization of synergies.
- Track the status of the $6.5 million holdback and any potential indemnification claims.
- Confirm the Company's ability to service the increased debt load of $223.9 million given the current interest rate environment.