OCZ Technology Group entered into a $30 million loan and security agreement with Hercules Technology Growth Capital. This loan agreement consists of a $15 million term loan and a $15 million revolving loan facility. The company had reduced its use of the Wells Fargo Capital Finance credit facility and had no debt outstanding on it as of February 28, 2013. That facility has been terminated as part of the closing of the Hercules loan agreement.
"Obtaining this new credit facility is the first step in providing OCZ with a complete capital structure going forward. This capital will be used to strengthen the business, fund future growth, and support emerging enterprise opportunities," said Ralph Schmitt, CEO of OCZ Technology. "I am pleased with the operational improvements our team is making as we continue building a profitable OCZ which is focused on designing innovative, best-in-class Solid State Storage solutions for our valued customers."
The first $10 million of the term loan was drawn at closing with repayments due in thirty monthly installments beginning in November 2013. The remaining $5 million of the term loan is contingent upon the company being current in its SEC filings and achieving certain revenue levels for two consecutive quarters. Pursuant to the loan agreement, the company issued Hercules a warrant to purchase 688,073 shares of OCZ Technology common stock at an exercise price of $2.18 per share. In addition to the term loan, the Company has access to a $10 million revolving loan facility which shall be repaid in full in April 2016. An additional $5 million of revolving loan facility will be available to the company upon achieving certain financing covenants.
Hercules Technology Growth Capital is a specialty finance company focused on providing senior secured loans to venture capital-backed companies in technology-related markets, including technology, biotechnology, life science and cleantech industries at all stages of development. Since inception (December 2003), Hercules has committed more than $3.4 billion to over 220 companies and is the lender of choice for entrepreneurs and venture capital firms seeking growth capital financing.