Micro Focus secures new debt facility

Micro Focus International, the acquisitive legacy software firm, has agreed a new three-year banking facility with an enlarged group of banks for $275m.

The new facility, which will replace the existing $215m revolving credit facility, has been agreed with Barclays Corporate, Clydesdale Bank, HSBC, Lloyds TSB, and the Royal Bank of Scotland.

The margin on the new facility will be at the London Interbank Offered Rate (LIBOR) in addition to between 1.75% and 2.35%. This compares favourably to LIBOR plus 2.25% - 2.75% in the existing facility.

Start your trial of MoneyWeek today

Get unparalleled financial insight, analysis and expert opinion you can profit from.

Start your trial

Sign up for MoneyWeek’s free twice-daily newsletter.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Sign up

The financial covenants are earnings before interest and tax-to-interest cover ratio of a minimum of 4 to 1 and net debt to earnings before interest, taxes, depreciation, and amortization limits of 2 times until 30 April 2013 and 1.5 times thereafter.

The new facility will be initially utilised to repay the outstanding gross debt under the existing facility which today stands at $70m, after which it may be used for acquisitions, dividends and/or share buy-backs and general corporate purposes.

Chief financial officer Mike Phillips of Micro Focus said: "This new banking facility, with an additional bank and on better terms than our existing facility, underlines the financial strength of Micro Focus and provides us with significant flexibility for the foreseeable future."

The share price rose 2.95% to 377p by 11:57.

NR