Nobody had linked F-Secure’s own press release:
“the maturity is three years, and they include two one-year extension options at the lenders’ discretion”
Now financing is secured for long enough that during this time, the business should definitely be whipped into shape, and there’ll be plenty of time to generate solid cash flow during these financing agreements.
“they have better pricing terms than the replaced financing arrangements”
Regarding financial targets:
"Net debt to adjusted EBITDA
Net debt to adjusted EBITDA below 2.5x, excluding temporary impacts of acquisitions."
F-Secure’s profitability is good and its return on capital is so high that using financial leverage is sensible and recommended. But a ~150 MEUR mountain of debt like this weighs on the shoulders like a backpack full of rocks! When you pay ~7 MEUR in financing costs annually out of ~30-40 MEUR in operating profit, we are talking about a pretty large percentage.
Even if the interest rate in the terms of the new agreements dropped by less than a percentage point, it leaves a million more in net income.
An interesting group of owners. Let’s hope that Nordea’s portfolio manager knows what they are doing and others follow suit. Proprius fund indeed has +6 MEUR tied up in their F-Secure portfolio.
Apparently, F-Secure doesn’t have an IR manager and the CFO handles IR with their left hand. It’s commendable to keep the organization lean and costs low. But there is definitely room for a few foreign investors on the ownership side too! Blackrock, Vanguard, Norway’s oil fund, etc. F-Secure, at least in theory, is riding the crest of megatrends, ROE > 30% and a Price to Earnings of around 11! It would certainly be worth pitching this a bit in London, New York, Frankfurt; it wouldn’t hurt if Gen Digital, Verizon, or some private equity investor bought the whole gem away with a good premium.