Mitel Networks Corporation, a global leader in business communications, has completed its merger with Aastra Technologies. With $1,1-billion of combined annual revenue and 60-million customers worldwide, Mitel now has one of the largest global footprints in the industry and is driving consolidation in the $18-billion business communications market.
With the number one market share in Western Europe and a top five position globally, Mitel is well positioned to capitalise on a massive global growth opportunity as the market begins a long-term migration to cloud-based services.
“With this merger the combined annual revenue of Mitel exceeds a-billion dollars, which we believe creates the financial scale and operational leverage to drive shareholder value and profitable growth in an opportunity-rich consolidating market,” says Richard McBee, president and chief executive officer of Mitel.
“We now have double the talent, tools and range of solutions to aggressively compete for a greater share of our market.”
Mitel offers the most comprehensive portfolio in the industry, covering the entire customer and market landscape. From digital to IP to cloud; from platforms to applications to devices; for the very smallest business to the very largest enterprise, Mitel’s portfolio now offers customers ultimate control to maintain, migrate, or upgrade their business communications systems at their own pace.
With the best path to the cloud – private, public or hybrid – Mitel’s integrated portfolio enables a significant competitive advantage and ideally positions the company to serve customers and channels globally, regionally, and vertically; now and well into the future.
With a $100-million annual R&D budget as a combined business, Mitel has the resources needed to support on-going innovation and a broad range of global and regional solutions, protecting customers by limiting the risk of stranding them and their investment.
In conjunction with the closing of the merger, Mitel completed financing of a $405-million credit facility consisting of a $355-million term loan maturing in January 2020 and an undrawn $50-million revolving credit facility maturing in January 2019. The $355-million term loan is priced at LIBOR, plus 4,25% with a LIBOR floor of 10%. The undrawn $50-million revolving credit facility is priced at LIBOR, plus 4.25%.
“We are pleased to have secured new credit facilities on these very favourable terms, which significantly reduces our annual interest cost and enhances our operating flexibility,” says Steve Spooner, chief financial officer, Mitel.
“Our new capital structure, combined with the enhanced cash flow generation we expect from the merger, positions Mitel with one of the best financial platforms in the industry.”
Proceeds from the new credit facilities were used to finance the merger of Aastra, repay the $259-million outstanding under the existing credit facilities, as well as fees and expenses related to the transactions.
Jefferies Finance and The Toronto-Dominion Bank were joint lead arrangers and joint book-running managers for the new credit facilities. Jefferies acted as financial advisor to Mitel in connection with the merger and financing arrangements and TD Securities acted as financial advisor to Aastra.
The company anticipates approximately $50-million of run rate synergies within two and a half years, driven by supply chain optimisation, facilities consolidation and economies of scale. With the merger completed, Mitel expects the combined cash flow will allow for on-going debt repayment and is expected to provide Mitel liquidity and flexibility to aggressively pursue growth opportunities.
Mitel acquired all of the issued and outstanding Aastra common shares. Under the terms of the Arrangement, shareholders of Aastra received $6.52 in cash plus 3.6 common shares of Mitel (the “Mitel Shares”) for each Aastra common share held.
The total amount of cash paid by Mitel was approximately $80-million and the number of Mitel Shares issued was 44 162 509. Mitel financed the cash consideration of the transaction from cash on hand and from a portion of the proceeds from the new credit facility as discussed above.
