Clarivate Completes Refinancing of Term Loan and Revolver Extension

Rhea-AI Summary

Clarivate Plc (NYSE: CLVT) has successfully completed the refinancing of its term loan B credit facility and extended the maturity date of its revolving credit facility. The company refinanced all existing term loans with a new $2.150 billion tranche of term loans maturing in 2031, with a reduced interest rate margin of 275 basis points per annum. The new term loan facility effectively extends the maturity of the company's existing term loans by approximately 5 years. The new term loans amortize in equal quarterly installments equivalent to 1.00% per annum, with the balance due at maturity. Concurrently, the company's revolving credit facility was refinanced with a replacement $700 million facility, extending the maturity from 2027 to 2029. Jonathan Collins, Executive Vice President and Chief Financial Officer, expressed satisfaction with the outcome, citing the oversubscribed interest in the recent offering as a testament to their solid credit profile and strong cash flow generation.

Financial Analyst

The refinancing of Clarivate Plc's term loan B credit facility and the extension of its revolving credit facility's maturity date represent a strategic financial maneuver aimed at optimizing the company's capital structure. By securing a new $2.150 billion tranche of term loans with a lower interest rate margin of 275 basis points per annum, the company has effectively reduced its cost of debt. This reduction in interest payments can lead to an improvement in net income and cash flow, which are critical metrics for investors assessing the company's financial health.

The extension of the maturity date by approximately 5 years provides Clarivate with increased financial flexibility and reduces the risk of short-term liquidity pressures. The amortization terms, with equal quarterly installments equivalent to 1.00% per annum, are structured to ensure a gradual reduction of the principal over time, with the balance due at maturity. This approach can help the company manage its cash flows more effectively, potentially allowing for more strategic investments or debt reduction in the future.

Additionally, the oversubscription of the offering indicates strong market confidence in Clarivate's creditworthiness and its ability to generate robust cash flows. This market sentiment can have a positive effect on the company's stock price as it reflects investor confidence in the company's financial stability and growth prospects.

Debt Market Analyst

The successful refinancing of Clarivate's debt instruments is indicative of a favorable debt market environment, where interest rates and investor appetite allow for such strategic moves. The reduction of the interest rate margin by reference to term SOFR (Secured Overnight Financing Rate) suggests that Clarivate has capitalized on the current market conditions to lock in a lower cost of borrowing. This is significant for the company's long-term interest expense and overall financial strategy.

It is important to understand that term SOFR is a benchmark interest rate that has replaced LIBOR (London Interbank Offered Rate) for many financial instruments. It is based on transactions in the Treasury repurchase market and is considered a more reliable and transparent rate. Clarivate's reference to term SOFR in its new term loan indicates adherence to modern financial practices and potentially offers a more stable interest rate environment for the company's debt.

The extension of the revolving credit facility's maturity from 2027 to 2029 also suggests that Clarivate is proactively managing its working capital needs. This move provides the company with a safety net of accessible funds for unforeseen expenditures or investment opportunities, which can be crucial for sustaining operations and pursuing growth without the immediate pressure of refinancing.

Market Research Analyst

In the context of Clarivate's industry positioning, the refinancing and maturity extension may be perceived as a competitive advantage. Companies that effectively manage their debt obligations can allocate more resources toward innovation and market expansion. Clarivate's ability to secure favorable terms reflects its strong credit profile, which can be a differentiating factor when competing for market share.

Furthermore, the company's mention of strong cash flow generation aligns with industry trends where businesses with solid operational cash flows are often seen as more resilient and capable of weathering economic downturns. This perception can enhance the company's reputation among investors, customers and partners, potentially leading to more business opportunities and collaborative ventures.

The proactive financial management exhibited by Clarivate may set a precedent for other companies in the sector, emphasizing the importance of strategic financial planning. As the market continues to evolve, maintaining financial agility and a solid credit profile will be increasingly important for companies looking to remain competitive and responsive to market dynamics.

LONDON, Feb. 1, 2024 /PRNewswire/ -- Clarivate Plc (NYSE: CLVT) (the "Company" or "Clarivate"), a global leader in connecting people and organizations to intelligence they can trust to transform their world, announced today that it has successfully completed the refinancing of its term loan B credit facility and the extension of the maturity date of its revolving credit facility.

Pursuant to an amendment to the Company's existing credit agreement dated as of October 31, 2019, the Company refinanced all of its existing term loans with a new $2.150 billion tranche of term loans maturing in 2031, with a reduced interest rate margin of 275 basis points per annum in the case of loans bearing interest by reference to term SOFR.  The new term loan facility effectively extends the maturity of the Company's existing term loans by approximately 5 years.  The new term loans amortize in equal quarterly installments equivalent to 1.00% per annum, with the balance due at maturity.  Concurrently, the Company's revolving credit facility was refinanced with a replacement $700 million facility, which effectively extends the maturity of the revolving credit facility from 2027 to 2029.

"We are pleased with the positive outcome of extending the maturity of our term loan and lowering our annual cash interest costs," said Jonathan Collins, Executive Vice President and Chief Financial Officer. "The oversubscribed interest in the recent offering is a testament to our solid credit profile and strong cash flow generation."

About Clarivate
Clarivate™ is a leading global information services provider. We connect people and organizations to intelligence they can trust to transform their perspective, their work and our world. Our subscription and technology-based solutions are coupled with deep domain expertise and cover the areas of Academia & Government, Intellectual Property and Life Sciences & Healthcare. For more information, please visit clarivate.com.

Forward-Looking Statements

This communication contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express management's current views concerning future business, events, trends, contingencies, financial performance, or financial condition, appear at various places in this communication and may use words like "aim," "anticipate," "assume," "believe," "continue," "could," "estimate," "expect," "forecast," "future," "goal," "intend," "likely," "may," "might," "plan," "potential," "predict," "project," "see," "seek," "should," "strategy," "strive," "target," "will," and "would" and similar expressions, and variations or negatives of these words. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on management's current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are difficult to predict and many of which are outside of our control. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include those factors discussed under the caption "Risk Factors" in our annual report on Form 10-K/A, along with our other filings with the U.S. Securities and Exchange Commission ("SEC"). However, those factors should not be considered to be a complete statement of all potential risks and uncertainties. Additional risks and uncertainties not known to us or that we currently deem immaterial may also impair our business operations. Forward-looking statements are based only on information currently available to our management and speak only as of the date of this communication. We do not assume any obligation to publicly provide revisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. Please consult our public filings with the SEC or on our website at www.clarivate.com.

Category: Debt
Source: Clarivate Plc

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SOURCE Clarivate Plc

What is the ticker symbol for Clarivate Plc?

The ticker symbol for Clarivate Plc is CLVT.

What are the details of the refinancing of Clarivate's term loan B credit facility?

Clarivate refinanced all existing term loans with a new $2.150 billion tranche of term loans maturing in 2031, with a reduced interest rate margin of 275 basis points per annum.

What is the maturity date of Clarivate's revolving credit facility?

The maturity of Clarivate's revolving credit facility was extended from 2027 to 2029.

Who expressed satisfaction with the outcome of the refinancing?

Jonathan Collins, Executive Vice President and Chief Financial Officer, expressed satisfaction with the outcome, citing the oversubscribed interest in the recent offering as a testament to their solid credit profile and strong cash flow generation.