Business Context and Reporting Period
Company: Digi International Inc.
Filing Type: Form 8-K (Current Report)
Report Date: December 30, 2025
Event Date: December 23, 2025
Context: The company entered into a First Amendment to its Revolving Credit Agreement with BMO Bank N.A. and other lenders to modify pricing structures, fee rates, and borrowing capacity features.
Key Financial Metrics and Debt Structure
This filing details amendments to debt terms rather than reporting operational financial results (revenue, profit, or cash flow). Key debt-related metrics modified include:
- Applicable Margins (Term SOFR Loans): Adjusted range of 1.35% to 3.10% (previously 1.75% to 2.75%).
- Applicable Margins (Base Rate Loans): Adjusted range of 0.35% to 2.10% (previously 0.75% to 1.75%).
- Immediate Margins: Effective from the amendment date until the next compliance certificate, margins are set at 1.85% for Term SOFR loans and 0.85% for base rate loans.
- Commitment Fees: Reduced for leverage ratios between 1.75:1.00 and 3.00:1.00.
- Accordion Feature: Uncommitted additional borrowing capacity increased to the greater of $105 million or 100% of trailing twelve-month adjusted EBITDA (previously $95 million).
- Spread Adjustment: The 10 basis point credit spread adjustment on Term SOFR Loans was removed.
Material Changes Versus Prior Period
The amendment introduces several material changes to the original December 7, 2023, Credit Agreement:
- New Pricing Tier: Added a fifth pricing level (Level V) for total net leverage ratios of 3.00:1.00 or greater.
- Reduced Costs: Generally reduced applicable margin percentages for leverage ratios below 2.50:1.00 and commitment fees for ratios between 1.75:1.00 and 3.00:1.00.
- Structural Change: Eliminated the 10 basis point credit spread adjustment on Term SOFR Loans.
- Capacity Increase: Raised the threshold for the uncommitted accordion feature by $10 million.
Outlook, Risks, and Management Commentary
Management Commentary: The filing indicates a strategic move to optimize borrowing costs based on leverage ratios and to increase potential future borrowing flexibility. The immediate effect is a reduction in interest margins compared to the original agreement.
Risks and Contingencies: The filing does not explicitly list new risks but notes that interest rates and fees are now contingent on the company's total net leverage ratio, with a new tier introduced for higher leverage (3.00:1.00+).
Unusual Items: None reported in this filing.
Investor Verification Checklist
- Verify the company's current total net leverage ratio to determine the applicable interest margin tier.
- Review the full text of the First Amendment (Exhibit 10.1) for specific covenant definitions and compliance requirements.
- Confirm the impact of the removed 10 basis point spread adjustment on current Term SOFR loan costs.
- Assess the likelihood of utilizing the increased $105 million accordion feature based on current liquidity needs.