Internap Corporation (NASDAQ:INAP) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01.
| Entry into a Material Definitive Agreement. |
On April 6, 2017, Internap Corporation (the Company) entered into
a Credit Agreement (the Credit Agreement) by and among the
Company, the Guarantors party thereto, the Lenders party thereto,
Jefferies Finance LLC, as Administrative Agent and Collateral
Agent, Jefferies Finance LLC and PNC Capital Markets LLC, as
Joint Lead Arrangers, PNC Bank, National Association, as
Syndication Agent and as Issuing Bank, and Jefferies Finance LLC,
as Documentation Agent, Sole Book Manager and as Swingline
Lender.
The Credit Agreement provides for a $300 million term loan
facility and a $25 million revolving credit facility (which
includes a $15 million letter of credit facility). In addition,
the Company may request incremental term loans and/or incremental
revolving loan commitments in an aggregate amount not to exceed
$50 million.
The proceeds of the term loan facility were used on April 6, 2017
to refinance the Companys existing credit facility and to pay
costs and expenses associated with the Credit Agreement.
The maturity date of the term loan facility is April 6, 2022 and
the maturity date of the revolving credit facility is October 6,
2021. The maturity date for the term loan facility may be
extended in accordance with the terms of the Credit Agreement.
The Company may prepay loans under the Credit Agreement at any
time, subject to certain notice requirements and LIBOR breakage
costs. If within one year after entering into the Credit
Agreement the term loans are prepaid with the proceeds of certain
new term loans that have an effective yield that is lower than
the effective yield of the prepaid term loans, or the Credit
Agreement is amended to reduce the effective yield on the term
loans, in certain cases, such prepaid or repriced portions of the
term loans will be subject to a penalty equal to 1.00% of the
outstanding term loans being prepaid or repriced.
At the Companys election, loans under the Credit Agreement may be
made as either Adjusted Base Rate loans or Eurodollar loans. The
applicable margin for term loans is 6.0% for Adjusted Base Rate
loans and 7.0% for Eurodollar loans. The applicable margin for
revolving loans is 6.0% for Adjusted Base Rate loans and 7.0% for
Eurodollar loans. All Eurodollar loans are subject to a
pre-margin floor of 1.00%.
The obligations of the Company under the Credit Agreement are
guaranteed by its subsidiaries Internap Connectivity LLC and
Ubersmith, Inc. (the Guarantors) to Security Agreement, dated as
of April 6, 2017, by and among the Company, the Guarantors and
Jefferies Finance LLC, as Collateral Agent (the Security
Agreement). The obligations of the Company and the Guarantors
under the Credit Agreement are secured by substantially all of
the tangible and intangible assets of the Company and the
Guarantors, including by a pledge of 100% of the equity interests
of the domestic subsidiaries of the Company and the Guarantors
and 65% of the equity interests of the first-tier foreign
subsidiaries of the Company and the Guarantors.
The Credit Agreement contains customary financial maintenance and
operating covenants, including without limitation covenants
restricting the incurrence or existence of debt or liens, the
making of investments, the payment of dividends and affiliate
transactions. The financial maintenance covenants in the Credit
Agreement consist of a maximum total net leverage ratio covenant
and a minimum consolidated interest coverage ratio covenant. The
Credit Agreement also contains customary events of default,
including among others nonpayment of principal or interest,
material inaccuracy of representations, failure to comply with
covenants and specified insolvency events. If an event of default
occurs and is continuing under the Credit Agreement, the entire
outstanding balance may become immediately due and payable.
Certain of the lenders under the Credit Agreement and their
affiliates may now or in the future have various relationships
with the Company and its subsidiaries involving the provision of
financial services, such as investment banking, commercial
banking, financial advisory, cash management, custody and
corporate credit card services and interest rate hedging for
which they will receive customary fees.
The foregoing descriptions of the Credit Agreement and the
Security Agreement do not purport to be complete and are
qualified in their entirety by reference to the full text of the
Credit Agreement and Security Agreement, which are filed as
Exhibit 10.1 and Exhibit 10.2, respectively, to this Form 8-K and
are incorporated herein by reference.
| Item 1.02. |
Termination of a Material Definitive Agreement. |
In connection with the entry into the Credit Agreement described
in Item 1.01 above, on April 6, 2017 the Company and its
applicable subsidiaries terminated the Credit Agreement, dated as
of November 26, 2013, as amended from time to time, among the
Company, the Guarantors party thereto, the Lenders party thereto,
Jefferies Finance LLC, as Administrative Agent and Collateral
Agent, Jefferies Finance LLC and PNC Capital Markets LLC, as
Joint Lead Arrangers and Joint Book Managers, PNC Bank, National
Association, as Syndication Agent, ING Capital LLC, as
Documentation Agent, and Jefferies Finance LLC, as Issuing Bank
and Swingline Lender.
| Item 2.03. |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth in Item 1.01 above is hereby
incorporated by reference into this Item 2.03.
| Item 4.01. |
Changes in Registrants Certifying Accountant. |
On March 31, 2017, the Audit Committee (the Audit Committee) of
the Company dismissed PricewaterhouseCoopers LLP (PwC) as the
Companys independent registered public accounting firm for the
fiscal year ending December 31, 2017, effective March 31, 2017.
The reports of PwC on the consolidated financial statements for
the fiscal years ended December 31, 2015 and 2016 contained no
adverse opinion or disclaimer of opinion, and were not qualified
or modified as to uncertainty, audit scope or accounting
principle.
During the fiscal years ended December 31, 2015 and December 31,
2016 and the subsequent interim period through March 31, 2017
there have been (i) no disagreements with PwC on any matter of
accounting principles or practices, financial statement
disclosure or auditing scope or procedures, which disagreements,
if not resolved to the satisfaction of PwC, would have caused
them to make reference to the subject matter of the disagreements
in their reports on the financial statements for such fiscal
years, and (ii) no reportable events, as such term is defined in
Item 304(a)(1)(v) of Regulation S-K, except as follows.
As described in more detail in Item 9A in the Companys Annual
Report on Form 10-K filed with the Securities and Exchange
Commission (SEC) on March 13, 2017, the Company did not design
and maintain effective internal controls over the review of cash
flow forecasts used in support of certain fair value estimates.
Specifically, the review of cash flow forecasts used in the
Companys capitalized software impairment test, goodwill
impairment test, long-lived asset impairment test and going
concern assessment was not designed and maintained at an
appropriate level of precision and rigor commensurate with its
financial reporting requirements. This control deficiency
resulted in immaterial audit adjustments to capitalized software
assets in the Companys consolidated financial statements for the
year ended December 31, 2016. The Audit Committee discussed the
reportable event with PwC, and has authorized PwC to respond
fully to the inquiries of the successor accountant (reported
below) concerning the reportable event.
The Company has provided PwC with a copy of the disclosure set
forth in this Item 4.01 and has requested that PwC furnish the
Company with a letter addressed to the SEC stating whether or not
it agrees with the statements made herein, each as required by
applicable SEC rules. A copy of PwCs letter, dated April 5, 2017
is attached hereto as Exhibit 16.1.
On March 31, 2017, the Audit Committee of the Company authorized
the appointment of BDO USA, LLP (BDO) as its new independent
registered public accounting firm for the year ending December
31, 2017, effective March 31, 2017.
During the fiscal years ended December 31, 2015 and December 31,
2016 and in the subsequent interim period through March 31, 2017,
neither the Company nor anyone acting on its behalf consulted
with BDO regarding (i) the application of accounting principles
to a specific transaction, either completed or proposed, or the
type of audit opinion that might be rendered on the Companys
consolidated financial statements, and neither a written report
nor
oral advice was provided to the Company that BDO concluded was an
important factor considered by the Company in reaching a decision
as to any accounting, auditing, or financial reporting issue,
(ii) any matter that was the subject of a disagreement as such
term is defined in Item 304(a)(1)(iv) of Regulation S-K, or (iii)
any reportable event as such term is defined in Item 304(a)(1)(v)
of Regulation S-K.
| Item 8.01. | Other Events. |
Appointment of General Manager and Senior Vice
President of INAP Cloud Services Business Unit
The Company has appointed Andrew Day as General Manager and
Senior Vice President of the INAP Cloud Services Business Unit of
the Company, effective April 1, 2017. Mr. Day will lead the
Companys iWeb, Agile Cloud and Bare Metal Server services
business in North America and the EMEA with responsibility for
sales, product management, marketing, business development,
customer support, technical operations, engineering and program
management. Mr. Day provided management and advisory services to
the Company as a management consultant with ADAY Management from
November 2016 through March 2017. He brings over 25 years of
management experience in telecommunications, technology
innovation, sales and marketing leadership. Prior to joining the
Company, Mr. Day held several senior leadership positions in
sales and general management for technology companies. Most
recently, he served as Senior Vice President, Consumer Channels
at Rogers Communications, where he led all consumer product sales
across all sales channels. Previously, Mr. Day was CEO Primus
Telecommunications Group Inc. and Primus Canada. Before joining
Primus, he held various roles of increasing responsibility in
general management, sales, product management, and finance at
ATT, Gillette and Xerox. Mr. Day holds an Honours B. Comm. from
McMaster University, is a Chartered Public Accountant (CPA) and
is also a Chartered Director (C. Dir.).
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits:
The following exhibits are filed herewith:
| 10.1 |
Credit Agreement, dated as of April 6, 2017, by and among the Company, the Guarantors party thereto, the Lenders party thereto, Jefferies Finance LLC, as Administrative Agent and Collateral Agent, Jefferies Finance LLC and PNC Capital Markets LLC, as Joint Lead Arrangers, PNC Bank, National Association, as Syndication Agent and as Issuing Bank, and Jefferies Finance LLC, as Documentation Agent, Sole Book Manager and as Swingline Lender. |
|
| 10.2 |
Security Agreement, dated as of April 6, 2017, by and among the Company, the Guarantors party thereto and Jefferies Finance LLC, as Collateral Agent. |
|
| 16.1 |
Letter from PricewaterhouseCoopers LLP to the Securities and Exchange Commission dated April 5, 2017. |
About Internap Corporation (NASDAQ:INAP)
Internap Corporation, formerly InterNAP Network Services Corporation, provides Internet infrastructure services. The Company operates through two segments: Data Center Services segment and Internet Protocol Services segment. It offers hybrid Internet infrastructure services, which enables customers to mix and match cloud, hosting and colocation for the combination of services. It also offers availability across a global network of data centers, and services backed by service level agreements (SLAs). The Company serves approximately 11,000 customers in various industries, including software and Internet; media and entertainment; business services; healthcare technology infrastructure, and telecommunications. Its Data Center Services segment includes colocation, hosting and cloud services. IP Services segment includes its performance IP service, content delivery network (CDN) services, IP routing hardware and software platform, and Managed Internet Route Optimizer Controller. Internap Corporation (NASDAQ:INAP) Recent Trading Information
Internap Corporation (NASDAQ:INAP) closed its last trading session up +0.03 at 3.62 with 518,080 shares trading hands.