Synchronoss Technologies Significantly Improves Capital Structure Through Discounted Retirement of Series B Preferred and Reduction in Senior Note Obligation
Synchronoss Technologies announced strategic moves to improve its capital structure, including the retirement of Series B Preferred Stock and a reduction in Senior Note obligations. The company secured a $75.0 million term loan from AS Birch Grove, which will finance the repurchase of the remaining Series B Preferred shares and $19.7 million of Senior Notes at a discount. These actions are projected to result in a $7.3 million net debt reduction and $10.6 million in pre-tax cost savings over the loan's term. The company aims to reduce its capital cost from 14% to SOFR+550 basis points, saving over $2 million annually. CEO Jeff Miller emphasized the transformation towards a cash-generating enterprise, supported by strategic partner B. Riley. TD Cowen and legal counsels facilitated the transaction.
- Secured $75 million term loan to enhance financial position.
- Repurchase of Series B Preferred and $19.7 million Senior Notes at a discount.
- $7.3 million net debt reduction.
- $10.6 million in projected pre-tax cost savings.
- Annual pre-tax cost savings of over $2 million from reduced capital costs.
- Reduction of debt dependent on execution of strategic initiatives.
Insights
Synchronoss Technologies' recent financial maneuvers indicate a substantial improvement in their capital structure. By repurchasing $52.6 million worth of Series B Preferred shares and $19.7 million of Senior Notes at a discount, the company is effectively reducing its financial obligations. This change is expected to result in a $7.3 million enhancement to their capital structure and $10.6 million in pre-tax cost savings over the term of the loan.
These actions demonstrate a strategic move to lower borrowing costs and optimize the balance sheet. The reduction in cost of capital from 14% to SOFR+550 basis points is a significant saving, enhancing the company's profitability. This shift may increase investor confidence in Synchronoss' ability to manage its debt and generate free cash flow, a important factor in assessing the company's long-term viability.
From a retail investor's perspective, this restructuring shows a commitment to financial prudence and operational flexibility. Lower debt levels and reduced interest expenses can lead to better financial health and potential stock price appreciation. However, it's important to monitor how effectively these measures translate into increased cash flows and profitability moving forward.
Synchronoss Technologies is positioning itself as a more streamlined and financially stable entity. The retirement of Series B Preferred shares and Senior Notes at a discount reflects a proactive approach to reducing high-cost debt, which is a positive signal to the market. By engaging AS Birch Grove for a $75 million term loan, Synchronoss showcases its ability to attract financing from reputable sources, indicating confidence in its business model and future prospects.
This strategic financial restructuring can enhance the company's competitive position within the cloud solutions market. The projected $10.6 million in pre-tax cost savings along with a stronger balance sheet will provide Synchronoss with more resources to invest in growth opportunities and operational improvements.
For retail investors, understanding the broader market implications is essential. This move could potentially lead to increased market share if the company leverages its improved financial position to innovate and capture new business. However, investors should remain cautious and consider the overall market dynamics and how Synchronoss' strategic initiatives align with industry trends.
Combined Transactions Expected to Result in a
BRIDGEWATER, N.J., June 28, 2024 (GLOBE NEWSWIRE) -- Synchronoss Technologies, Inc. (“Synchronoss” or the “Company”) (Nasdaq: SNCR), a global leader and innovator in personal Cloud platforms, today announced the retirement of its outstanding Series B Perpetual Non-Convertible Preferred Stock (the “Series B Preferred”) and
Once complete, the Company expects these actions to reduce its total outstanding net debt, inclusive of its retired Series B Preferred, by approximately
With the proceeds of the financing, Synchronoss intends to repurchase the remaining 60,826 shares of its outstanding Series B Preferred held by a subsidiary of B. Riley Financial, Inc. (Nasdaq: RILY) (“B. Riley”). The Company has agreed to repurchase the Series B Preferred for an aggregate purchase price of
Additionally, with the remaining proceeds from the term loan, Synchronoss intends to repurchase approximately
Synchronoss believes that these measures collectively strengthen the capital structure of the Company and they are expected to be additive to the steps previously taken to position the Company to generate material free cash flows in 2024 and beyond.
Jeff Miller, CEO of Synchronoss Technologies Inc., stated, “Today’s announcement marks another major step in our ongoing evolution as we transform the business into a sustainably profitable and increasingly cash generative enterprise. Our ability to secure this financing from our new lending partner AS Birch Grove reflects the strong financial health of our Company and enables us to materially enhance our balance sheet through our combined capital structure improvements. We are also grateful to B. Riley for their strategic support over the past three years as our largest shareholder, which has been integral to our transformation strategy, and we look forward to their continued support.”
Scott Cragg, Partner at AS Birch Grove, added, “We are excited to partner with Synchronoss and are impressed by the Company’s successful transformation into a pure-play global Cloud solutions provider. We are pleased to support the continued evolution of the Company’s industry-leading platform and execution of growth opportunities with both existing and future customers.”
TD Cowen acted as Exclusive Financial Advisor to Synchronoss. Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP served as legal counsel to Synchronoss. Cahill Gordon & Reindel LLP served as legal counsel to AS Birch Grove.
About AS Birch Grove
AS Birch Grove manages approximately
About Synchronoss
Synchronoss Technologies (Nasdaq: SNCR), a global leader in personal Cloud solutions, empowers service providers to establish secure and meaningful connections with their subscribers. Synchronoss’ SaaS Cloud platform simplifies onboarding processes and fosters subscriber engagement, resulting in enhanced revenue streams, reduced expenses, and faster time-to-market. Millions of subscribers trust Synchronoss to safeguard their most cherished memories and important digital content. Explore how Synchronoss’ Cloud-focused solutions redefine the way you connect with your digital world at www.synchronoss.com.
Forward-Looking Statements
This press release includes statements concerning Synchronoss and its future expectations, plans and prospects that constitute “forward-looking statements” within the meaning of federal securities law. These forward-looking statements reflect the Company’s current views with respect to, among other things, the closing of the repurchases of Series B Preferred and Senior Notes, the use of proceeds from the term loan, the costs savings and future benefits of the financing and repurchases and the Company’s financial performance. These statements are often, though not always made through the use of words or phrases such as “may,” “might,” “should,” “could,” “predict,” “will,” “seek,” “estimate,” “project,” “projection,” “annualized,” “strive,” “goal,” “target,” “outlook,” “aim,” “expect,” “plan,” “anticipate,” “intends,” “believes,” “potential” or “continue” or other similar expressions are intended to identify forward-looking statements. These forward-looking statements are not historical facts and are based on current expectations and projections about future events and financial trends that management believes may affect its business, financial condition and results of operations, any of which, by their nature, are uncertain and beyond Synchronoss’ control. Accordingly, any such forward looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although Synchronoss believes that the expectations reflected in these forward looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward looking statements. Except as otherwise indicated, these forward-looking statements speak only as of the date of this press release and are subject to a number of risks, uncertainties and assumptions including, without limitation, risks relating to the satisfaction of the customary closing conditions related to the repurchases of Series B Preferred and Senior Notes, the Company’s ability to sustain or increase revenue from its larger customers and generate revenue from new customers, the Company’s expectations regarding expenses and revenue, the sufficiency of the Company’s cash resources, the impact of legal proceedings involving the Company, including the litigation by the Securities and Exchange Commission (the “SEC”) against certain former employees of the Company described in the Company’s most recent SEC filings, and other risks and factors that are described in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, which is on file with the SEC and available on the SEC’s website at www.sec.gov. Additional factors may be described in those sections of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, expected to be filed with the SEC in the third quarter of 2024. The Company does not undertake any obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise.
Media Relations Contact:
Domenick Cilea
Springboard
dcilea@springboardpr.com
Investor Relations Contact:
Tom Colton and Alec Wilson
Gateway Group, Inc.
SNCR@gateway-grp.com
FAQ
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