Plano Telecom Tech Giant Secures $53.4 Million in Private Placement Financing to Reduce Debt and Drive Growth

Ribbon Communications CFO Mick Lopez cites the interest rate outlook for the timing of the private placement financing and fixed-rate swap to reduce debt.

Plano-based Ribbon Communications Inc. announced the completion of a private placement financing of Series A preferred stock and warrants to purchase shares of common stock, resulting in gross proceeds of about $53.4 million.

The publicly held communications technology company, which relocated to Plano from Massachusetts in 2021, provides global software and networking solutions to service providers, enterprises, and critical infrastructure sectors.

Ribbon’s three largest stockholders participated in the financing: Neuberger Berman client funds, JPMorgan Chase & Co., and Swarth Investments Ltd. The net proceeds, together with cash on hand and funds received from the sale of its fixed rate interest rate swap, were used to prepay $75 million of the principal amount outstanding on the Term Loan A under Ribbon’s senior secured credit agreement, according to a news release.

Ribbon’s CFO Mick Lopez, expressed pleasure with the continued interest and support the company received from existing and new stockholders and the banks included in its credit facility.

“We believe the structure of the preferred stock, coupled with the previously announced amendment to the credit facility, complements our existing senior secured credit facility in a stockholder-friendly way, while preserving balance sheet flexibility going forward,” Lopez said in a statement.

Lopez also said the company believes the outlook for future interest rate increases is diminishing, making it an ideal time to capture the value of the fixed-rate swap and effectively reduce the company’s total outstanding debt by about $20 million.

In the private placement, 55,000 shares of Series A preferred stock were issued by Ribbon, along with warrants to purchase about 4.86 million shares of common stock.

According to the release, the warrants can be exercised immediately and will be valid for four years from the date of issuance. The exercise price for the warrants is $3.77 per share, which is 15% higher than the volume-weighted average price of Ribbon’s common stock over a two-day period on March 27 and 28, 2023.

B. Riley Securities acted as sole placement agent in connection with the private placement and JMP Securities, a Citizens Company, served as financial advisor to Ribbon, the company notes. With the closing of the private placement and the completion of the amendment to the senior secured credit agreement in place,

Ribbon Relocated to North Texas

Ribbon Communications moved its corporate headquarters from Westford, a city outside of Boston, to Plano in 2021. The North Texas office houses the company’s sales, marketing, research and development, customer support, general, and administrative efforts.

The move was part of its plan to reduce and consolidate the number of its facilities worldwide, it said at the time.

Ribbon Communications was created by the merger of Sonus Networks and GENBAND US in 2017, both specializing in Voice Over Internet Protocol (VoIP) tech. Since its formation, the company has made several acquisitions, including a “transformational” deal for ECI Telecom Group Ltd. in Israel in 2020.

Ribbon aims to help clients modernize their networks and improve competitive positioning in our data-driven world.

The company’s solutions portfolio includes core-to-edge software-centric solutions, cloud-native offers, security and analytics tools, and IP and optical networking solutions for 5G.

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