UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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Item 1.01 Entry into a Material Definitive Agreement.
Third Amendment to Credit Agreement
On April 12, 2024 (the “Amendment No. 3 Effective Date”), Cerence Inc. (the “Borrower” or the “Company”) entered into Amendment No. 3 to Credit Agreement (the “Amendment”), by and among the Borrower, the lenders and issuing banks party thereto and Wells Fargo Bank, N.A., as administrative agent (the “Administrative Agent”), which amends certain terms of the Credit Agreement, dated as of June 12, 2020, by and among the Company, the lenders and issuing banks party thereto and Wells Fargo Bank, N.A., as administrative agent (as amended by Amendment No. 1, dated December 17, 2020, Amendment No. 2, dated November 22, 2022 and the Amendment, and as further amended, supplemented, or otherwise modified, the “Credit Agreement”).
Amendment No. 3 modified certain financial covenants. Tested quarterly, the Company will be required to maintain (i) a net secured leveraged ratio of not greater than 3.00 to 1.00; (ii) a minimum level of EBITDA (as defined in the Credit Agreement) of not less than (A) negative $5 million for the six month period ending June 30, 2024, (B) $7.5 million for the nine month period ending September 30, 2024, (C) $20 million for the four consecutive fiscal quarters ending December 31, 2024, (D) $30 million for the four consecutive fiscal quarters ending March 31, 2025, (E) $35 million for the four consecutive fiscal quarters ending June 30, 2025 and for the four consecutive fiscal quarters ending September 30, 2025, (F) $40 million for the four consecutive fiscal quarters ending December 31, 2025, and (G) $40 million for the four consecutive fiscal quarters ending March 31, 2026; (iii) minimum liquidity of at least $50 million; and (iv) aggregate capital expenditures of not more than $10 million.
Amendment No. 3 revised certain interest rates in the Credit Agreement. The applicable margin is SOFR plus 3.00% for SOFR loans and the highest of (i) the federal funds effective rate, (ii) the prime rate, and (iii) one-month SOFR plus 1.00% (the highest of clauses (i) through (iii), the “ABR”) plus 2.00% for ABR loans.
Amendment No. 3 also modified the maturity date for the revolving facility. The revolving facility matures on April 1, 2026, provided that if on any date during the period commencing on the date which is 91 days prior to the maturity date of the Company’s 3.00% Convertible Senior Notes due 2025 and any indebtedness incurred to refinance such notes that matures on or prior to July 1, 2026 (such debt, the “early maturity debt”), and ending on July 1, 2026, the maturity date of such early maturity debt has not been extended to a date after July 1, 2026 and the Company does not hold in a segregated deposit account an amount of cash sufficient to repay and discharge the principal amount of the early maturity debt at maturity, then the revolving facility shall mature on the date that is 91 days prior to the maturity date of the early maturity debt.
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
The information described above under Item 1.01 of this report is incorporated into this Item 2.03 by reference.
Item 9.01—Financial Statements and Exhibits
(d) Exhibits
| † | Certain schedules and similar attachments have been omitted. The Company agrees to furnish a supplemental copy of any omitted schedule or attachment to the Securities and Exchange Commission upon request. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: April 15, 2024 | CERENCE INC. | |||||
| By: | /s/ Stefan Ortmanns | |||||
| Name: | Stefan Ortmanns | |||||
| Title: | Chief Executive Officer | |||||