Diebold Nixdorf (NYSE: DBD), a world leader in automating, digitizing, and transforming the way people bank and shop, today announced entry into a comprehensive agreement with key financial stakeholders to support transactions that would refinance certain debt with near-term maturities and provide the company with $400 million in new capital. The company also provided an update on its financial activities.
We are pleased to announce that today we entered into a Transaction Support Agreement (TSA) with the holders of over a majority of our term loans and each series of our outstanding secured and unsecured notes (or approximately 78.8% of the aggregate principal amount of our existing term loans, about 59.3% of the aggregate principal amount of our existing unsecured notes due 2024, and approximately 89.7% of the aggregate principal amount of our existing secured notes due 2025). The transactions contemplated by the TSA are subject to customary closing conditions and achieving certain participation thresholds as set forth therein. Upon consummation of the transactions contemplated by the TSA, we will have extended our near-term debt maturities and obtained additional liquidity. It is our expectation that the transactions contemplated by the TSA will be consummated prior to Dec. 31, 2022.
The parties to the TSA have provided commitments subject to satisfaction of the conditions specified therein, with respect to the full $400 million in additional financing contemplated by the TSA. However, the TSA provides that holders of our existing term loans, existing unsecured notes due 2024, and/or our existing secured notes due 2025 who did not initially sign the TSA but execute a joinder to the TSA by Oct. 27, 2022, will have the opportunity to elect to provide commitments with respect to up to a specified share of such additional financing, replacing certain of the existing commitments. In addition, only parties who execute a joinder to the TSA by such date will be eligible to receive certain transaction premiums that are described in the TSA.
Octavio Marquez, Diebold Nixdorf president, and a chief executive officer said: “We are grateful for the support we received from our lenders and noteholders. We believe the very rigorous and in-depth diligence process, and the support for the TSA, demonstrate the financial community’s confidence in our long-term strategic model and the resilience of our business. Our product and solution set is as robust as it has ever been, with consistently strong customer demand. By year-end 2022, the backlog is expected to be at approximately $1.3 billion, which equates to securing approximately 80% of full-year 2023 Product revenue. Additionally, of our $2.1 billion Services business, 70% of revenues are recurring. This provides us with $1.4 billion in contract coverage of our full-year 2023 Services revenue. Through the refinancing described in this agreement, we will achieve enhanced financial flexibility, including the ability to make strategic investments in the business.”
Upon entering into the TSA with its lenders and bondholders, Diebold Nixdorf today revised its operating forecast for full-year (FY) 2022 and its strategic operating model for FY2023 and FY2024, which is summarized below.
Demand for Diebold Nixdorf’s products and solutions remains strong. Given the company’s elevated backlog and where we are in the year, we expect to have 100% coverage for forecast product revenue in 2022. Concurrently, the FY2022 operating forecast reflects the effects of supply chain challenges, which have led to deferred product revenue from FY2022 to FY2023 for approximately 2,500 ATMs, 2,000 self-checkout (SCO), and 7,000 electronic points of sale (EPOS) units. Adjusted EBITDA primarily reflects deferred revenue flow through. The updated unlevered free cash flow forecast reflects the normalization of working capital and certain cash costs related to the TSA process.
While the macroeconomic environment has presented widely discussed challenges in the supply chain, the combination of strong demand, industry-leading solutions, and ongoing mitigation and improvements contribute to Diebold Nixdorf’s confidence in its strategic operating model. The company remains focused on its customers as a global leader in banking and retail technology, automation, and related services.
Additional information on today’s announcement, including a copy of the TSA, the terms and conditions of the transactions contemplated by the TSA, and certain other information provided to the lenders and noteholders in connection with the TSA can be found in the current report on Form 8-K filed today with the SEC and available on Diebold Nixdorf’s Investor Relations website.