Inseego Corp. Cuts Debt by 30%, Secures Long-Term Financial Stability

Benzinga · 07/01 10:16

Inseego Corp. (NASDAQ:INSG) (the "Company"), a technology leader in 5G mobile and fixed wireless solutions for mobile network operators, Fortune 500 enterprises, and SMBs, announced today that it has entered into a series of agreements, as part of its overall capital structure management to reduce its total debt and restructure its outstanding 3.25% convertible notes due 2025 (the "2025 Notes"). As part of this initiative, the Company's three largest noteholders, whose holdings represent more than $125 million face value or nearly 80% of the outstanding 2025 Notes, have agreed to sell to the Company for cash, or exchange for long-term debt and equity of the Company, all of their 2025 Notes. This meaningful reduction and long-term extension of debt was executed at a 30% discount to the face value of the notes, further contributing to the improvement of the Company's capital structure.

In implementing this strategic capital structure initiative, the Company executed three overall transactions on June 28, 2024, as follows: (1) Convertible Debt Repurchase: the Company agreed to purchase all of the $45.9 million in face value of the 2025 Notes (the "Highbridge Notes") held by certain entities managed by Highbridge Capital Management, LLC (such entities, "Highbridge"), the second largest noteholder, for $32.1 million in cash, or $700 per $1,000 face value, plus accrued interest, the repurchase and debt reduction of which is expected to close on or about July 1, 2024; (2) Repurchase Loan: to finance a portion of the Convertible Debt Repurchase, the Company entered into a loan facility and borrowed $19.5 million from (i) South Ocean Funding, LLC ("South Ocean"), which is an affiliate of Golden Harbor Ltd. ("Golden Harbor") and Tavistock Financial, LLC, and (ii) certain participant lenders (the "Participating Lenders"); and (3) Convertible Debt Exchange: the Company entered into binding term sheets to exchange $80.0 million of face value that represents all of the 2025 Notes held by North Sound Partners and Golden Harbor (the "Noteholders"), the largest and third-largest noteholders, respectively, at the same 30% discount as the Highbridge Notes purchase, for a combination of new long-term debt and equity.

"With today's announcement, we are delivering on our commitment and taking meaningful steps to significantly reduce our debt burden and strengthen the Company's financial position," said Inseego Executive Chairman Philip Brace. "This is a tremendous result for Inseego, and we are pleased by the support from our existing stakeholders who have demonstrated their belief in the Company's future. While we still have some work to do, I believe that with this restructuring, coupled with our improving operational results, Inseego is well-positioned for long-term success."

To finance a portion of the $32.1 million Convertible Debt Repurchase of the Highbridge Notes, the Company borrowed $19.5 million (the "Loan") pursuant to a Loan and Security Agreement (the "Loan Agreement") with South Ocean and the Participating Lenders, which consist of Philip Brace, the Company's Executive Chairman, and North Sound Ventures, LP.