Edgio, Inc. (NASDAQ:EGIO), a Delaware-based company specializing in business services, has entered into a new credit agreement that enhances its financial structure. On Thursday, the company reported to the Securities and Exchange Commission (SEC) that on August 23, 2024, it secured a senior secured term loan credit facility, termed the "Priority Credit Agreement," with Lynrock Lake Master Fund LP.
The Priority Credit Agreement provides Edgio with $9,146,000 in term loans, which, after an 18% upfront fee to the lender, results in net cash proceeds of $7,500,000. These funds are earmarked for working capital purposes. The loan bears an interest rate of 19.5% per annum, payable monthly, and is set to mature on February 23, 2025.
This new credit facility is guaranteed by Edgio's domestic subsidiaries and is secured by a first priority lien on the company's assets. It takes precedence over the existing security interests from the prior credit agreement and notes, effectively restructuring the company's secured debt obligations.
To facilitate the new agreement, Edgio also entered into a priority lien intercreditor agreement, which subordinates the security interests of the previous credit agreement and notes to those of the new Priority Credit Agreement.
In conjunction with this, the company executed the First Supplemental Indenture to the Indenture and First Amendment to the Collateral Agreement, which integrates the Priority Credit Agreement's terms into the existing framework.
The Priority Credit Agreement and the associated First Supplemental Indenture reflect Edgio's strategic financial management as it navigates its capital structure. The company's filings with the SEC, including the full text of the Priority Credit Agreement and the First Supplemental Indenture, provide further details on the terms and conditions of these arrangements.
In other recent news, business services company Edgio Inc. has announced the expansion of its board of directors from four to five members, following the resignation of Mio Babic.
The new addition to the board is Eugene I. Davis, a seasoned professional with over four decades of leadership, finance, and governance experience. Davis, currently the Chairman and CEO of PIRINATE Consulting Group, will serve as a Class II director and Chairman of the Transaction Committee at Edgio. His term is set for a minimum of six months with a fixed compensation of $40,000 per month.
In other recent developments, Edgio Inc. faces potential delisting from Nasdaq due to delayed quarterly financial filings. The delay is attributed to the resignation of the company's independent accounting firm and the subsequent time required to engage a new one.
In response to this situation, Nasdaq has requested a revised compliance plan from Edgio, possibly extending the filing deadline to September 30, 2024.
The company, which had previously alerted the Securities and Exchange Commission (SEC) of its inability to file the required Form 10-Q on time, is now working to expedite the completion and filing of its quarterly report."
InvestingPro Insights
Edgio, Inc.'s recent Priority Credit Agreement underscores the company's efforts to restructure its financial obligations and enhance working capital. To better understand Edgio's financial health and market position, key metrics and insights from InvestingPro are revealing. The company's market capitalization stands at a modest $60.6 million, reflecting its size within the business services sector. Despite notable revenue growth of 46.16% over the last twelve months as of Q3 2023, Edgio is grappling with significant challenges, as evidenced by its negative P/E ratio of -0.5 and a Price / Book multiple of just 0.39, suggesting the market values the company at less than its net asset value.
Furthermore, the company's short-term financial outlook appears strained. Two InvestingPro Tips highlight critical concerns: Edgio operates with a significant debt burden and may have trouble making interest payments on its debt. These factors, combined with a recent price drop of nearly 69% over the last year and a lack of dividend payments to shareholders, paint a picture of a company facing considerable headwinds.
For readers seeking a deeper dive into Edgio's financial metrics and future prospects, InvestingPro offers a suite of additional tips and insights. There are 10 more InvestingPro Tips available that provide further analysis on Edgio's financial performance and market valuation, which can be found at InvestingPro.
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