Envestnet extends and amends $500 million credit facility

Envestnet has extended and repriced its credit facility.

The portfolio management software and investment outsourcing company disclosed in a Securities and Exchange Commission (SEC) filing that it had changed the interest rate on its $500 million revolving credit facility. Envestnet also said it has pushed the maturity date for the revolver from September 2024 to February 2027.

The new interest rate on borrowings from the loan now gives Envestnet some options. The business can choose to pay either an unknown base rate plus a margin between 0.25% and 1.75%, or the Secured Overnight Funding Rate (SOFR) plus a margin between 1.25% and 2.75%. In both cases, the additional margin is determined by Envestnet’s total net leverage ratio, which measures the ratio of the company’s debt to its Ebitda.

Under the old terms of the loan, Envestnet would have had to pay interest at LIBOR plus a margin of between 1.5% and 3.25%. This additional margin was also determined by Envestnet’s leverage ratio.

Corporate borrowers across America are gradually changing the interest rates on their debt to accommodate the phasing out of LIBOR as the benchmark rate. SOFR has become a popular replacement.

Envestnet has not borrowed any money under the revolving credit facility as of the end of the third quarter of 2021. The company’s other debt includes $345 million in convertible notes due 2023 and $517.5 million in convertible notes due in 2025.

Even if it didn’t fire the gun, Envestnet still has a cost of ownership to keep the facility on its balance sheet. Under the new loan terms, Envestnet is required to pay a commitment fee that varies between 0.25% and 0.3% of the unused balance each year; the exact amount is determined by its net leverage ratio.

Under the old loan terms, Envestnet’s commitment fee was 0.25% of the unused balance.

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