SAN DIEGO - Inseego Corp. (NASDAQ:INSG), a company specializing in 5G and wireless solutions, has announced a series of agreements aimed at restructuring its debt.
The agreements include a repurchase and exchange of approximately $125 million of its 3.25% convertible notes due in 2025, representing nearly 80% of the outstanding notes, at a 30% discount.
On June 28, 2024, Inseego executed a convertible debt repurchase from Highbridge Capital Management, LLC, acquiring $45.9 million in notes for $32.1 million in cash, a transaction expected to close today.
To finance this, Inseego borrowed $19.5 million from South Ocean Funding, LLC, and other participating lenders, including the company’s Executive Chairman, Philip Brace, and North Sound Ventures, LP.
In addition, Inseego agreed to exchange $80.0 million of notes held by North Sound Partners and Golden Harbor for new long-term debt and equity. This exchange will provide the note holders with approximately 2.4 million shares of common stock and $31.8 million in new senior secured notes, along with warrants to purchase additional shares.
The new long-term notes will have a 9.0% annual interest rate and are set to mature on May 1, 2029. The warrants issued in both transactions have an exercise price of $12.12 per share and will expire four years from the date of issuance.
Following these transactions, Inseego expects to have approximately $33.0 million of the 2025 notes remaining and a total debt of $84.3 million. The company reported an adjusted EBITDA for the trailing 12 months ended March 31, 2024, of approximately $16.5 million and cash of $12.3 million, indicating a net debt ratio of around 4.4x.
Inseego's Executive Chairman, Philip Brace, expressed confidence that the debt restructuring, along with improving operational results, positions the company for long-term success. The company's CFO, Steven Gatoff, also noted the progress in reducing leverage and capital structure right-sizing with moderate dilution to stockholders.
The loan from South Ocean and the participating lenders matures on September 30, 2024, with an option to extend to March 31, 2025. It carries an interest rate of 12.0% per year, and an exit fee of 4.0% of the principal amount upon repayment.
Inseego has maintained its financial guidance for the second quarter of 2024, with no changes announced. The information provided is based on a press release statement. Raymond James and Greenberg Traurig LLP advised the company on the restructuring transactions.
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