Artificial Intelligence

OpenText Completes Notes Offering and Term Loan Amendment as part of Micro Focus Acquisition Financing

OpenText™ (NASDAQ: OTEX), (TSX: OTEX) announced today that, in connection with its proposed acquisition (the "Acquisition") of Micro Focus International plc ("Micro Focus"), Open Text Corporation (the "Company" or "OpenText") has closed its offering (the "Notes Offering") of US$1 billion principal amount of 6.90% senior secured fixed rate notes due 2027 (the "Notes") and executed an amendment to its first lien term loan facility due 2029 (the "Term Loan"). As a result, the entire previously announced US$4.585 billion aggregate debt financing package for the Acquisition is now finalized, and, as such, all commitments under the bridge loan agreement related to the Acquisition have been correspondingly terminated undrawn.

OpenText logo (PRNewsfoto/Open Text Corporation) (PRNewsfoto/Open Text Corporation)

"With today's announcement, we have completed a solid long-term capital structure for the Acquisition," said OpenText CEO & CTO Mark J. Barrenechea . "We now have Micro Focus shareholder approval and a completed capital structure in place. We remain on track to close the Acquisition next quarter and look forward to soon welcoming customers, partners and employees."

The net proceeds from the Notes Offering, borrowings under the Term Loan and the Company's existing revolving credit facility, and cash on hand will be used to fund the Acquisition.

After giving effect to the Notes Offering and the above noted borrowings, following closing of the Acquisition, the Company's long-term debt would be approximately US$9.3 billion (consisting of approximately 46% fixed and 54% floating rate debt), with a weighted average interest rate of approximately 5.88% and a weighted average maturity of approximately 6 years. As previously announced, through the combined company's cash generating profile and rapid de-levering plan, OpenText is targeting a net leverage ratio of less than three times within eight quarters following the closing of the Acquisition.

Additional Information

The Notes and the Term Loan are guaranteed on a senior secured basis by OpenText's existing wholly-owned subsidiaries organized in the United States or Canada that borrow or guarantee OpenText's obligations under its senior credit facilities. The Term Loan is also guaranteed on a senior secured basis by Open Text UK Holding Limited and, concurrent with or within one business day of the closing of the Acquisition, the Notes will be guaranteed on a senior secured basis by Open Text UK Holding Limited. The Notes and related guarantees are secured with the same priority as the Company's senior credit facilities.

The Notes and related guarantees are not registered under the Securities Act of 1933, as amended (the "Securities Act"). The Notes and the related guarantees were issued pursuant to Rule 144A and Regulation S under the Securities Act. The Notes and related guarantees may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act), except to persons reasonably believed to be qualified institutional buyers in reliance on the exemption from registration provided by Rule 144A under the Securities Act and to certain persons in offshore transactions in reliance on Regulation S under the Securities Act. The Notes have not been and will not be qualified for sale to the public by prospectus under applicable Canadian securities laws and, accordingly, any offer and sale of the Notes in Canada will be made on a basis which is exempt from the prospectus requirements of such securities laws. This press release shall not constitute an offer to sell, or the solicitation of an offer to buy, nor shall there be any sale of, any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration, qualification or exemption under the securities laws of any such jurisdiction.

About OpenText

OpenText, The Information Company™, enables organizations to gain insight through market leading information management solutions, powered by OpenText Cloud Editions.

Publication on a website

This announcement and certain associated documents will be available, subject to certain restrictions, on OpenText's website at https://investors.opentext.com/ by no later than 12 noon ( London time) on the business day following the publication of this announcement. This announcement and certain associated documents available on OpenText's website are only being provided to comply with the requirements under the UK City Code on Takeovers and Mergers. Neither the content any of the websites referred to in this announcement nor the content of any website accessible from hyperlinks in this announcement is incorporated into, or forms part of, this announcement.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this announcement, including statements regarding OpenText's targeted net leverage ratio and timing thereof, OpenText's plans, objectives, expectations and intentions relating to the Acquisition, the Acquisition's expected contribution to OpenText's results, closing of the Acquisition and certain conditions to be met prior to borrowing under the Term Loan, as well as the expected timing and benefits of the Acquisition, impact on future financial performance including in respect of annual recurring revenues, cloud growth, adjusted EBITDA, cash flows and earnings, may contain words considered forward-looking statements or information under applicable securities laws. These statements are based on OpenText's current expectations, estimates, forecasts and projections about the operating environment, economies and markets in which OpenText operates, as well as the impact of the ongoing COVID-19 pandemic. These statements are subject to important assumptions, risks and uncertainties that are difficult to predict, and the actual outcome may be materially different. OpenText's assumptions, although considered reasonable by OpenText at the date of this announcement, may prove to be inaccurate and consequently its actual results could differ materially from the expectations set out herein. For additional information with respect to risks and other factors, which could occur, see OpenText's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other securities filings with the Securities and Exchange Commission and other securities regulators. Unless otherwise required by applicable securities laws, OpenText disclaims any intention or obligations to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Copyright © 2022 OpenText. All Rights Reserved. Trademarks owned by OpenText. One or more patents may cover this product(s). For more information, please visit https://www.opentext.com/patents .

OTEX-MNA

Further information, please contact:

Harry E. Blount
Senior Vice President, Investor Relations
OpenText Corporation
415-963-0825
investors@opentext.com

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SOURCE Open Text Corporation

News Provided by PR Newswire via QuoteMedia

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OpenText Buys Micro Focus

OpenText™ (NASDAQ: OTEX), (TSX: OTEX) announced today that it has closed the previously announced acquisition (the "Acquisition") of Micro Focus International plc ("Micro Focus"), a leading provider of mission-critical software technology and services that help customers accelerate digital transformation.

OpenText logo (PRNewsfoto/Open Text Corporation) (PRNewsfoto/Open Text Corporation)

"I would like to welcome Micro Focus customers, partners and employees to OpenText," said OpenText CEO & CTO Mark J. Barrenechea . "Digital life is life, and with Micro Focus' great products and talent, we will help organizations of all sizes accelerate their digital transformation."

Barrenechea further added, "With this acquisition, OpenText's corporate mission expands to help enterprise professionals secure their operations, gain more insight into their information, and better manage an increasingly hybrid and complex digital fabric with a new generation of tools that include Cybersecurity, Digital Operations Management, Applications Modernization & Delivery and AI & Analytics. This new generation of Information Management software will help organizations accelerate their digital transformation and drive growth while reducing costs."

Preliminary Financial Overview

Further information on our financial performance, as well as updated models, will be provided when OpenText reports its second quarter Fiscal 2023 financial & business results on February 2, 2023 .

Closing Terms of the Acquisition

  • Total purchase price of approximately $5.8 billion , inclusive of Micro Focus' cash and debt, subject to final adjustments
  • Total purchase price is 2.3x Micro Focus' TTM revenues (1)
  • Total purchase price is 6.7x Micro Focus' TTM adjusted EBITDA (2)
  • Immediately accretive to F'23 adjusted EBITDA dollars
  • Expected to be on the OpenText operating model within 6 full quarters or sooner
  • Net leverage (3) expected to be less than 3x within 8 full quarters or sooner
  • Consistent with previously announced cost synergies of $400 million , expect to balance the combined company through an approximate 8% workforce reduction due to the acquisition of Micro Focus

"We have a structured and disciplined approach to M&A. The last six months of planning has led us to a defined integration plan to deliver on our committed outcomes. We are ready and excited about winning the Information Management market, strong customer outcomes, and company growth and expanded cash flows," concluded Barrenechea.

About OpenText

OpenText, The Information Company™, enables organizations to gain insight through market leading information management solutions, powered by OpenText Cloud Editions. For more information about OpenText (NASDAQ: OTEX, TSX: OTEX) visit opentext.com.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this press release, including statements about the focus of Open Text Corporation ("OpenText" or "the Company") in our fiscal year ending June 30, 2023 (Fiscal 2023) on growth, future cloud growth and market share gains, future organic growth initiatives and deployment of capital, the associated benefits of the Acquisition, including the Acquisition being immediately accretive to adjusted EBITDA dollars, the expectation to be on the OpenText operating model and net leverage reduction, new platform and product offerings and associated benefits to customers, scaling OpenText, expected cost synergies, and other matters, which may contain words such as "anticipates", "expects", "intends", "plans", "believes", "seeks", "estimates", "may", "could", "would", "might", "will" and variations of these words or similar expressions are considered forward-looking statements or information under applicable securities laws. In addition, any information or statements that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking, and based on our current expectations, forecasts and projections about the operating environment, economies and markets in which we operate. Forward-looking statements reflect our current estimates, beliefs and assumptions, which are based on management's perception of historic trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances, such as certain assumptions about the economy, as well as market, financial and operational assumptions. Management's estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change. We can give no assurance that such estimates, beliefs and assumptions will prove to be correct. Such forward-looking statements involve known and unknown risks and uncertainties such as those relating to: all statements regarding the expected future financial position, results of operations, cash flows, dividends, financing plans, business strategy, budgets, capital expenditures, competitive positions, growth opportunities, plans and objectives of management, including any anticipated synergy benefits; our ability to integrate successfully Micro Focus' operations and programs, including incurring unanticipated costs, delays or difficulties;  duration and severity of the COVID-19 pandemic, including any new strains or resurgence; and our ability to develop, protect and maintain our intellectual property and proprietary technology and to operate without infringing on the proprietary rights of others. For additional information with respect to risks and other factors which could occur, see the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other securities filings with the Securities and Exchange Commission (SEC) and other securities regulators. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

This press release include certain "non-GAAP measures." Please refer to the Company's "Reconciliation of selected GAAP-based measures to Non-GAAP-based measures" included within the Company's current and historical filings on Forms 10-Q, 10-K and 8-K for more information on the use of non-GAAP measures by the Company.

Copyright © 2023 OpenText. All Rights Reserved. Trademarks owned by OpenText. One or more patents may cover this product(s). For more information, please visit https://www.opentext.com/patents .

Note: All dollar amounts in this press release are in US dollars unless otherwise indicated.

(1)

TTM revenue represents Micro Focus' unaudited revenue for the twelve months ended October 31, 2022, excluding Digital Safe revenue, based on IFRS standards.

(2)

TTM adjusted EBITDA is a non-IFRS financial measure and represents Micro Focus' unaudited adjusted EBITDA for the twelve months ended October 31, 2022, excluding Digital Safe.

(3)

Consolidated Net Leverage Ratio (pro forma) is calculated using bank covenant methodology.


OTEX-MNA

Cision View original content to download multimedia: https://www.prnewswire.com/news-releases/opentext-buys-micro-focus-301734613.html

SOURCE Open Text Corporation

News Provided by PR Newswire via QuoteMedia

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