First Derivatives agrees extended bank facilities totalling £130m to support growth plans

Maria Nikolova

The facilities will refinance the Group’s existing borrowings and will be partly used to finance the acquisition of the minority shareholding in Kx Systems.

First Derivatives plc (LON:FDP) has earlier today announced that it has agreed extended bank facilities totalling £130 million to support its growth plans. The facilities comprise a term loan of £65 million and a revolving loan facility of £65 million.

The five-year facilities will refinance the Group’s existing borrowings and will be partly used to finance the acquisition of the minority shareholding in Kx Systems, due to be made on June 29, 2019.

The term loan and the revolving loan facility will have an interest rate for the first 12 months of LIBOR plus 2.75%. After this, an interest rate ratchet will apply from LIBOR plus 2.00% to LIBOR plus 3.00% depending on the level of debt relative to EBITDA. This represents an improvement on current terms where the interest rate payable varies from LIBOR plus 2.25% to LIBOR plus 3.50%.

The lead arranger for the bank facilities is Bank of Ireland with participation from Barclays, First Trust Bank and Silicon Valley Bank.

In July 2018, First Derivatives announced an agreement to acquire the minority shareholdings in Kx Systems, taking 100% ownership by end June 2019. Under the terms of the deal, First Derivatives has agreed to acquire the remaining 600,022 Kx Systems shares that it does not already own from the minority shareholders, namely Arthur Whitney and Janet Lustgarten, who are co-founders and current directors of Kx Systems, and their associated persons. The aggregate consideration is $53.8 million in cash, to be financed from FD’s available facilities.

As per the latest First Derivatives’ financial results – those for the six months to end-August 2018, the Group marked strong growth in software revenue, up 21%, with license revenue up 39% driven by increased demand for Kx technology across the Group’s client base. FinTech revenue rose 24% to £82.7 million (H1 2018: £66.8m), driven by growth in software revenue and an expansion of services provided to clients. MarTech revenue was up 8% to £19.8 million (H1 2018: £18.3m), driven by 42% growth in subscriptions for First Derivatives’ Marketing Cloud platform, powered by Kx.

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