Signs definitive documentation with debenture
holders, term loan lenders, revolving credit facility lender, and
largest shareholder to strengthen balance sheet and reduce debt,
positioning the Company to execute its long-term strategic plan
Company remains focused on meeting increased
market demand for its unique and comprehensive services and
solutions
Transaction expected to close in the third
quarter of 2024
KLDiscovery Inc. (“KLDiscovery” or the “Company”), a global
leader in data management, information governance, eDiscovery, and
advisory services solutions, today announced that it has signed a
transaction support agreement (the “TSA”) with its convertible
debenture holders, term loan lenders, revolving credit facility
lender, and largest shareholder and an exchange agreement with its
convertible debenture holders. This represents an important step
toward closing a transaction that will significantly reduce the
Company’s long-term debt and strengthen its financial position,
enabling KLDiscovery to focus on its growth model and investment in
market-leading client solutions.
“We are pleased to reach this significant milestone with our
capital partners as we drive toward closing this transaction in the
near term,” said Chris Weiler, Chief Executive Officer of
KLDiscovery. “KLDiscovery's future is focused on growth through
technology and service innovation. This transaction will bolster
our balance sheet and position us for long-term success. With the
support of our long-term stakeholders and our dedicated team
driving us forward, we remain committed to delivering exceptional
service and pioneering solutions for our clients.”
Under the TSA and the related definitive documents,
KLDiscovery’s outstanding convertible notes will be cancelled and
exchanged for new shares representing approximately 96% of the
Company’s pro forma outstanding common equity (on a diluted basis)
and the maturity of the Company’s term loan will be extended to
August 2027. This transaction will result in both a meaningful
reduction in KLDiscovery’s overall debt and the successful
elimination of its near-term debt maturities. The documentation
also contemplates KLDiscovery receiving committed second lien
secured financing to support future operations and growth.
The signing of these transaction documents reflects the
continued strong support of KLDiscovery’s debenture holders, term
loan lenders, revolving credit facility lender, and largest
shareholder, who are confident in the Company’s prospects and
business strategy.
Kevin Griffin, CEO & Chief Investment Officer of debenture
holder MGG Investment Group, said, “We are looking forward to
working with Chris and the entire KLDiscovery team to build on the
Company’s impressive track record. As corporations continue to
grapple with more and more complex litigation and regulatory
compliance matters, KLDiscovery is well-positioned to capture the
growing demand for its industry-leading specialized eDiscovery,
information governance, and data recovery solutions globally. The
Company’s robust pipeline will be supported by a strong balance
sheet that will allow it to actively pursue many growth
opportunities available to it.”
The transaction remains subject to satisfying certain closing
conditions and is expected to close in the third quarter of 2024.
In the interim, KLDiscovery continues to focus on meeting the
increased market demand for its unique and comprehensive solutions
headlined by Nebula, the Company’s flagship, end-to-end AI / ML
powered solution that serves as a singular platform of engagement
for legal and other types of data. The Company maintains its
commitment to providing its clients with the highest quality
services, market-leading data security, and uninterrupted access to
its entire portfolio of services and technology.
Advisors
Gibson, Dunn & Crutcher LLP is serving as legal counsel,
Guggenheim Securities, LLC and AlixPartners are serving as
financial advisors, and C Street Advisory Group is serving as
strategic communications advisor to the Company.
Morrison & Foerster LLP is serving as legal counsel and
Lazard is serving as investment banker to the debenture
holders.
About KLDiscovery
KLDiscovery provides technology-enabled services and software to
help law firms, corporations, and government agencies solve complex
data challenges. With offices in 26 locations across 17 countries,
KLDiscovery is a global leader in delivering best-in-class data
management, information governance, and eDiscovery solutions to
support the litigation, regulatory compliance, and internal
investigation needs of clients. Serving organizations for over 30
years, KLDiscovery offers data collection and forensic
investigation, early case assessment, data processing, application
software and data hosting for web-based document reviews, and
managed document review services. In addition, through its global
Ontrack data management business, KLDiscovery delivers world-class
data recovery, disaster recovery, email extraction and restoration,
data destruction, and tape management. KLDiscovery has been
recognized as one of the fastest growing companies in North America
by both Inc. Magazine (Inc. 5000) and Deloitte (Deloitte’s
Technology Fast 500), and CEO Chris Weiler was a 2014 Ernst &
Young Entrepreneur of the Year™. Additionally, KLDiscovery is a
Relativity Certified Partner and maintains ISO/IEC 27001 Certified
data centers around the world. Visit www.kldiscovery.com to learn more.
Forward-Looking Statements
This press release includes “forward looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, Section 21E of the Securities Exchange Act of 1934 and the
United States Private Securities Litigation Reform Act of 1995. All
statements contained in this press release other than statements of
historical facts, including, without limitation, statements
regarding the terms of the transaction, the ability to close and
the timing of the closing of the transaction, the Company's future
and its long-term stakeholders’ support, the Company’s ability to
capture demand for its solutions globally and pursue growth
opportunities, Company expansion and Company investment in growth
and technology-enabled services and software are forward-looking
statements. When used in this press release, the words “estimated,”
“expects,” “anticipates,” “forecasts,” “believes,” “may,” “will,”
“should,” “future” and variations of these words or similar
expressions (or the negative versions of such words or expressions)
are intended to identify forward-looking statements.
These forward-looking statements are not guarantees of future
performance, conditions, results, or events, and involve a number
of known and unknown risks, uncertainties, assumptions and other
important factors, many of which are outside KLDiscovery’s
management’s control, that could cause actual results or outcomes
to differ materially from those discussed in the forward-looking
statements. Important factors, among others, that may affect actual
results or outcomes include: closing of the transactions described
herein, including satisfaction or waiver of all conditions to
closing; consequences of KLDiscovery’s substantial levels of
indebtedness, including the pending maturity and potential
acceleration thereof, and its ability to repay its debt obligations
as they become due or to secure alternative sources of financing;
KLDiscovery’s potential failure to comply with privacy and
information security regulations governing the client datasets it
processes and stores; KLDiscovery’s ability to operate in highly
competitive markets, and potential adverse effects of this
competition; risk of decreased revenues if KLDiscovery does not
adapt its pricing models; the ability to attract, motivate and
retain qualified employees, including members of KLDiscovery’s
senior management team; the ability to maintain a high level of
client service and expand operations; potential issues with
KLDiscovery’s product offerings that could cause legal exposure,
reputational damage and an inability to deliver services;
KLDiscovery’s ability to develop and successfully grow revenues
from new products such as Nebula, improve existing products and
adapt its business model to keep pace with industry trends; risk
that KLDiscovery’s products and services fail to interoperate with
third-party systems; potential unavailability of third-party
technology that KLDiscovery uses in its products and services;
potential disruption of KLDiscovery’s products, offerings, website
and networks; difficulties resulting from KLDiscovery’s
implementation of new consolidated business systems; the ability to
deliver products and services following a disaster or business
continuity event; disease or similar public health threat, such as
COVID-19; potential unauthorized use of our products and technology
by third parties and/or data security breaches and other incidents;
potential intellectual property infringement claims; and the
ability to comply with various trade restrictions, such as
sanctions and export controls, resulting from KLDiscovery’s
international operations. These risks and other factors discussed
in the “Risk Factors” section of KLDiscovery’s Annual Report on
Form 10-K for the year ended December 31, 2024, and subsequent
Quarterly Report on Form 10-Q filed with the Securities Exchange
Commission (“SEC”) and any other reports KLDiscovery files with the
SEC, could cause actual results to differ materially from those
expressed or implied by forward-looking statements made by
KLDiscovery or on its behalf. Given these risks and uncertainties,
investors should not place undue reliance on forward-looking
statements as a prediction of actual results or outcomes. All
statements speak only as of the date made, and unless legally
required, KLDiscovery undertakes no obligation to update or revise
publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
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Danny Zambito 888.811.3789 danny.zambito@kldiscovery.com