Incredimail 2014 Annual Report Download - page 51

Credit Facilities
In September 2011, we entered into a loan agreement with each of Bank Leumi Le-
Israel ("Leumi") and First International Bank of
Israel ("FIBI"), to secure a credit facility of up to a total of $20 million of financing. During the second quarter of 2012, we amended both
agreements, and in addition reduced the amount of the credit facility to $10 million, $6.0 million provided by Leumi, and $4.0 million by FIBI.
In December 2014 we executed a cross-
currency and interest SWAP transaction with Leumi in order to mitigate the potential impact of the
fluctuations in the ILS/$ exchange rate in regards to the future interest and principal payments of our convertible bonds (described below), which
are all denominated in ILS. In April 1, 2015, we amended the agreement with Leumi in regards to the financial covenants to secure the
fulfillment of all the obligations, liabilities and indebtedness to Leumi effective December 31, 2014. The repayment of the debt is structured over
four and five years from the respective draw dates, and we have an option under each agreement for early repayment. As of December 31, 2014,
we had bank loans outstanding in the amount of $4.25 million to be paid over the next one to two years, including $1.95 million classified as
long term debt and $2.3 million as current maturities. In order to secure our obligations to the banks, we originally granted to the banks a first
priority floating charge on all of our assets and a first priority fixed charge on certain other immaterial assets, which were removed in 2014 due
to the lower outstanding amounts under the credit facilities. We do have in place negative pledges for the benefit of the banks and liens over
other deposits deposited with the banks from time to time.
Series L Convertible Bonds
On September 23, 2014, we completed a public offering in Israel of Series L Convertible Bonds (the "Bonds"). The Bonds have an
aggregate principal amount of approximately ILS 143.5 million (approximately $36.9 million as of December 31, 2014) at a price of ILS 965 per
unit of ILS 1,000 par value. We received total net proceeds of approximately ILS 136.4 million (approximately $35.1 million as of December
31, 2014). The Bonds, which are listed on the Tel Aviv Stock Exchange, are convertible into an aggregate of approximately 4.27 million
ordinary shares, at a conversion price of ILS 33.605 per share (approximately $8.6 per share as of December 31, 2014). The principal of the
Bonds are repayable in five equal annual installments commencing on March 31, 2016, with a final maturity date of March 31, 2020. The Bonds
bear interest at the rate of 5% per year, subject to increase to up to 6% in the event of downgrades of our debt rating. The interest is payable
semi-annually on March 31 and September 30 of each of the years 2015 through 2019, as well as a final payment on March 31, 2020.
Under the terms of our Bonds, our ability to make distributions is subject to various limitations, including:
As of December 31, 2014, we met all the foregoing conditions.
Under the terms of our Bonds, we are required to maintain and comply with the following financial covenants:
As of December 31, 2014, we were in compliance with all of the foregoing covenants.
• the distribution will not cause shareholders’
equity to be below $150 million or, except with respect to repurchase of equity securities,
retained earnings to be below $31.5 million;
• the distributions in any year may not exceed 50% of the accumulated net income of the prior years, starting with 2013; and
•
the ratio of net financial indebtedness to twelve-month EBITDA is not more than 1.5 at the end of the prior quarter.
•
shareholders' equity of at least $120 million at the end of each quarter;
•
ratio of net financial indebtedness to twelve-month EBITDA of not more than 2.5 at the end of each quarter;
•
twelve-month EBITDA at the end of each quarter of not less than 40% of original aggregate principal amount of the bonds; and
•
cash and cash equivalents of at least $10 million (and, six months prior to each principal payment date, a sufficient amount to repay the
principal and interest then due).
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