Based on current information, Inside Secure estimates that it will have to pay an aggregate consideration of approximately $143 million at closing plus an estimated $9 million earn-out in the second quarter of 2019.

A three-step fully funded financing package

The transaction consideration will be financed through a combination of:

• Inside Secure’s cash-on-hand for approximately $38 million⁶;
• Fully committed private debt of $54 million, based on the estimated earn-out, provided by Apera Capital, an independent European private debt manager providing private capital solutions to mid-market companies in Western Europe.
  • Commitment to make available a bond financing through the subscription of notes for $45 million, plus an additional amount of up to $10 million to contribute to the financing of the earn-out. The commitment of Apera Capital is conditional upon the preparation, execution and delivery of the subscription agreement in respect of the notes and other relevant finance documents and the satisfaction of customary conditions of issuance;
  • Term 7 years, full-bullet;
  • Interest: LIBOR (subject to a 2% floor) plus a margin of initially 7%, that could potentially be reduced, after twelve months, subject to a net leverage-based determination. Certain upfront and commitment fees will also be payable in respect of the financing;
  • Customary financial covenants (net leverage ratio and interest cover test);
  • Security package in line with market practices;
  • Early redemption at par possible after expiry of 24 months, whereas for the first year customary non-call/make-whole provisions and for the second year customary soft-call provisions will apply (subject to certain exceptions). Mandatory early redemption events, positive and negative undertakings as well as events of default (including a cross-default) and acceleration rights for the benefit of the noteholders, in each case as customary for this type of financing.

• Two fully-underwritten equity transactions with a combined amount of EUR 52 million ($60 million), to be recommended for approval by Inside Secure’s shareholders in a general meeting to be held on January 21, 2019:
  • A EUR 30 million mandatory redeemable bond issuance reserved for OEP, fully redeemable into newly issued shares of Inside Secure (obligations remboursables en actions) valued at the lower of:
    (i) EUR 1.66 (i.e., 90% of the arithmetic average of the daily volume-weighted average trading price of Inside Secure’s shares on Euronext Paris during a 7-trading day period from 26 November to 4 December 2018 (both inclusive)), and
    (ii) the higher of (x) 7-day arithmetic average of daily volume-weighted-average prices of Inside Secure’s shares on Euronext Paris, starting on the seventh trading day preceding the day the redemption is being requested (or the date for redemption at maturity (5.5 years after the bonds issue date)) and (y) EUR 1.38 (i.e., 75% of the arithmetic average of daily volume-weighted average trading prices of Inside Secure’s shares on Euronext Paris during a 7-trading day period from 26 November to 4 December 2018 (both inclusive)).
    
    These redeemable bonds will bear annual interest of 2.5% payable semi-annually and will be treated as equity for the company.
    
    The mandatory redeemable bond would result in an estimated dilution of 29%⁷ based of the current share capital of Inside Secure.
  • An approximate EUR 22 million rights issue with preferential subscription rights to existing shareholders.