Synchronoss receives federal CARES Act tax refund

Synchronoss (SNCR) Technologies announced the receipt of the expected tax refund from the 2020 CARES Act. The Internal Revenue Service has confirmed the total amount of the refund will be $33.9M, which includes $5.9M of interest payment. Currently, the Company has received $30.2M, of which 75% or $22.6M, has already been used to pay down the existing term loan at par. The Internal Revenue Service has indicated that the final payment of $3.7M should be received by the Company prior to Labor Day 2025. Seventy-five percent of the total proceeds from the refund, totaling approximately $25.4M after the receipt of the final payment, will pay down a portion of the $200M term loan facility at par pursuant to the terms of the Credit Agreement. This will result in an annual interest savings of approximately $2.9M at the current interest rate. After the payments have been applied to the term loan, the Company will have total debt of $173.4M, cash of approximately $30M and net debt of approximately $143M. The Company has reduced its total debt by over $100M over the course of the last 4 years. Additionally, the Company expects to be eligible for a one-time 50-basis point interest rate step down on the first anniversary of the term loan pursuant to the terms of the Credit Agreement based on the improved debt leverage ratio. The remainder of the refund proceeds will move to the balance sheet, providing the Company with additional operational flexibility to improve its capital structure and for investment in its Personal Cloud solution.