Software Circle agrees new £16.7m loan facility

The AIM-traded firm said the facility was structured to address the company’s financial obligations and support its ongoing acquisition strategy.

It said it would use £6.7m of the funds to fully repay outstanding perpetual bonds issued in July 2020, including accrued interest and costs.

The repayment was scheduled to occur around 25 November.

Software Circle said the remaining £10m was earmarked for acquisitions, with a utilisation deadline of 22 May 2027.

The loan terms included a margin of about 5% over SONIA, and were governed by financial covenants.

They included a gross leverage ratio, initially capped at 3.8-to-one, tapering to 2.5-to-one by December 2027, and a minimum debt service cover ratio of 1.1-to-one throughout the facility's term.

Repayment terms would be staggered - half of the funds used for bond repayment would be repaid in 60 equal monthly instalments starting 22 December 2024.

For additional funds drawn, 25% would be repaid in 30 monthly instalments beginning 22 June 2027, with any remaining balance due in a single instalment on 22 November 2029.

The facility also included customary fees for arrangement, non-utilisation, and early repayment.

“Our merger and acquisition pipeline remains healthy,” said chief executive officer Gavin Cockerill.

“We intend to deploy our currently available capital before utilising the debt facility which further extends our financial runway, enabling us to pursue additional merger and acquisition opportunities.

“We are committed to maintaining our disciplined approach to acquisitions, ensuring that each addition is aligned with our culture, enhances our overall value proposition, supports our long-term objectives including our primary financial goal of maximising operating cash flow per share.”

At 1302 GMT, shares in Software Circle were up 8.7% at 25p.

Reporting by Josh White for Sharecast.com.