Fusion Connect Successfully Completes Capital Raise and Balance Sheet Recapitalization, Fully Funding Its Long-Term Growth Strategy
ATLANTA — January 19, 2022 — Fusion Connect, a leading managed security service provider of cloud communications and secure network solutions, announced today that it raised $55M in preferred equity and refinanced a $60M credit facility as part of an overall recapitalization of its balance sheet, providing full funding for its long-term growth strategy, while simultaneously reducing debt by over 80%.
This equity issuance and recapitalization, led by funds affiliated with or managed by Morgan Stanley Private Credit, Ellington Management Group, and Investcorp Credit Management BDC, Inc., was supported by existing stakeholders, including 100% of the company’s creditors. Following receipt of required regulatory approvals, Morgan Stanley Private Credit, via its affiliated or managed funds, will become the majority shareholder in the company. Several members of the Fusion Connect management team also participated in the capital raise, demonstrating substantial support for the company. Fusion Connect worked with Greenhill & Co., LLC. as its financial advisor and Akin Gump Strauss Hauer & Feld LLP as its legal counsel.
The new capital structure enables the company to embark on organic growth by accelerating investments in product development, sales and marketing, human capital, and a next-generation client management portal designed to deliver a world-class experience for mid-sized and enterprise clients.
“We’ve spent the past 18 months building a seasoned leadership team, investing in a next-generation product portfolio, enhancing our management platforms, consolidating our processes, and implementing a customer-first culture to bring world-class solutions and service to our clients,” said Brian Crotty, CEO at Fusion Connect.
Crotty added, “This significant investment enables us to deliver on our industry-leading service guarantee, uniquely positioning Fusion Connect to enhance our market position through accelerated distribution. I am particularly pleased to see the breadth and depth of management’s participation in the offering, further signaling the team’s solidarity around the strategic vision and ability to execute. I am very excited for what the future holds for our company, employees, clients, partners, and investors.”
“We look forward to partnering with Fusion Connect in this next phase of the company’s journey that builds on material improvements in the business’s operational metrics and product portfolio driven by the talented management team,” said Ashwin Krishnan, Co-Head, Morgan Stanley Private Credit (North America).
“The recapitalization is an exciting moment in Fusion Connect’s ability to accelerate investment and grow market share,” said Keith Soldan, CFO at Fusion Connect. “The investment and partnership with our new, world-class ownership group is a milestone in Fusion Connect’s evolution. Our employees, management team, customers, suppliers, and marketplace are very excited about this sponsorship.”
Key Takeaways
- The reduction of the remaining debt will leave Fusion Connect with favorable leverage vs. industry peers, with leverage ratios less than 1.7x based on TTM adjusted EBITDA.
- The company’s new senior credit facility will refinance the existing debt, and result in a material reduction of principal and cash interest payments, which will further enhance investments into organic growth efforts and product development.
- The investment group, including management, is committed to the long-term success of Fusion Connect.
Forward-Looking Statements
Certain statements contained in this news release may constitute “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent the current expectations, plans or forecasts of Fusion Connect based on available information. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. These statements often use words like “expects,” “anticipates,” “believes,” “estimates,” “targets,” “intends,” “plans,” “predict,” “goal” and other similar expressions or future or conditional verbs such as “will,” “may,” “might,” “should,” “would” and “could.” Forward-looking statements speak only as of the date they are made, and Fusion Connect undertakes no obligation to update any forward-looking statement to reflect the impact of circumstances or events that arise after the date the forward-looking statement was made.
