Post the repurchase, it will still have ~$351 million remaining on its 2024 notes and $726 million in total face value of debt, including its 2026 converts. EVBG’s net leverage stands at 4.3x following this action.
He views the retirement of its converts at a discount as one of EVBG’s better uses of cash as the company focuses on profitable growth.
While the ~$9 million debt discount does not significantly reduce net leverage, EVBG reduced its gross debt load by 12%, which should help ease a potential overhang on the stock.
He believed EVBG should be able to refinance or pay off its remaining ~$351 million of 2024 notes with its ~$400 million cash and estimated FCF generation of ~$118 million over the next two years.
He believed steps to reduce its overall debt load ahead of any potential refinancing should benefit the company and ultimately be accretive to its equity value.
Before this transaction, he was already modeling EVBG’s net leverage to decline to ~2.8x, exiting 2023 through cash generation and continued EBITDA improvements.
Price Action: EVBG shares traded higher by 0.23% at $30.97 on the last check Friday.
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