v3.25.1
Note 6 - Syndicated Revolver
 3 Months Ended
Mar. 31, 2025
Notes to Financial Statements  
Debt Disclosure [Text Block]

6. Syndicated Revolver

 

2023 Credit Facility
 
On September 22, 2023, the Company and its wholly owned subsidiaries, Tucows.com Co., Ting Inc., Tucows (Delaware) Inc., Wavelo, Inc. and Tucows (Emerald), LLC (each, a “Borrower” and together, the “Borrowers,” collectively with the Company, “Tucows”) and certain other subsidiaries of the Company, as guarantors, entered into a Credit Agreement (the “2023 Credit Agreement”) with Bank of Montreal, as administrative agent (“BMO” or the “Agent”), and the lenders party thereto, to, among other things, provide the Borrowers with a revolving credit facility in an aggregate amount not to exceed $240 million (the “2023 Credit Facility”). The Borrowers may request an increase to the Credit Facility through new commitments of up to $60 million if the Total Funded Debt to Adjusted EBITDA Ratio (as defined in the Credit Agreement) is less than 3.75:1.00. In connection with the 2023 Credit Facility, the Company incurred $0.9 million of fees paid to the Lenders and $0.3 million of legal fees related to the debt issuance. These fees have been reflected as a reduction to the carrying amount of the loan payable and will be amortized over the term of the 2023 Credit Agreement. The Credit Facility expires on September 22, 2026, which is the third anniversary of the effective date of the Credit Agreement.
 
During the three months ended March 31, 2025 and March 31, 2024,  the Company made repayments of $2.5 million and $5.5 million  on the 2023 Credit Facility.  
 

2023 Credit Facility Terms

 

The 2023 Credit Agreement contains customary representations and warranties, affirmative and negative covenants, and events of default. The 2023 Credit Agreement requires that the Company comply with certain customary non-financial covenants and restrictions. In addition, the Company has agreed to comply with the following financial covenants: (1) a leverage ratio by maintaining at all times a Total Funded Debt to Adjusted EBITDA Ratio of not more than (i) 4.50:1:00 at any time from and after the Closing Date to and including December 30, 2023; (ii) 4.25:1:00 from December 31, 2023 to and including March 30, 2024; (iii) 4.00:1.00 from March 31, 2024 to and including June 29, 2024; and (iv) 3.75:1.00 thereafter; and (2) an interest coverage ratio by maintaining as of the end of each rolling four financial quarter period, an Interest Coverage Ratio (as defined in the Credit Agreement) of not less than 3.00:1.00. The required principal repayment of $192.9 million is due in September 2026.

 

During the three months ended March 31, 2025, and the three months ended March 31, 2024 the Company was in compliance with the covenants under its credit agreements in effect at the time. During the three months ended March 31, 2025 and March 31, 2024, the Company recognized $0.1 million and $0.1 million of interest expense related to the amortization of the debt issuance costs of the 2023 Credit Facility.

 

Borrowings under the 2023 Credit Agreement will accrue interest and standby fees based on the Company's Total Funded Debt to Adjusted EBITDA ratio and the availment type as follows: 

 

  

If Total Funded Debt to EBITDA is:

 

Availment type or fee

 

Less than 2.00

  

Greater than or equal to 2.00 and less than 2.75

  

Greater than or equal to 2.75 and less than 3.50

  

Greater than or equal to 3.50 and less than 4.00

  

Greater than or equal to 4.00

 

Canadian dollar borrowings based on the Canadian overnight repo rate average or U.S. dollar borrowings based on SOFR and letter of credit fees (Margin)

  1.50%  2.00%  2.50%  3.00%  3.50%

Canadian borrowings based on Prime Rate or Canadian or U.S. dollar borrowings based on Base Rate (Margin)

  0.25%  0.75%  1.25%  1.75%  2.25%

Standby fees

  0.30%  0.40%  0.50%  0.60%  0.70%

 

The following table summarizes Tucows Businesses excluding-Ting's borrowings under the credit facilities (Dollar amounts in thousands of U.S. dollars): 

 

  

March 31, 2025

  

December 31, 2024

 
         

Principal

 $192,900  $195,400 

Less: unamortized debt discount and issuance costs

  (822)  (974)

Syndicated Revolver, long-term portion

 $192,078  $194,426