MCRO.L Regulatory News (MCRO)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

FOR IMMEDIATE RELEASE

1 December 2022

RECOMMENDED CASH ACQUISITION

of

MICRO FOCUS INTERNATIONAL PLC

by

OPEN TEXT CORPORATION

through its wholly-owned subsidiary, Open Text UK Holding Limited

OpenText Completes Notes Offering and Term Loan Amendment as part of Micro Focus Acquisition Financing

On 25 August 2022 the boards of Micro Focus International plc ("Micro Focus") and Open Text Corporation ("OpenText") announced that they had agreed the terms of a recommended cash acquisition by Open Text UK Holding Limited ("Bidco"), a wholly-owned subsidiary of OpenText, pursuant to which Bidco will acquire the entire issued and to be issued share capital of Micro Focus (the "Acquisition"), to be effected by means of a court-sanctioned scheme of arrangement under Part 26 of the Companies Act. On 20 September 2022 a scheme circular was published containing the full terms and conditions of the Acquisition (the "Scheme Document"). Capitalised terms in this announcement, unless otherwise defined, have the same meanings given to them in the Scheme Document.

OpenText today announced that, in connection with the Acquisition, it has closed its offering (the "Notes Offering") of US$1 billion principal amount of 6.90% senior secured fixed rate notes due 2027 (the "Notes") and executed an amendment to its Term Loan Agreement. As a result, the entire previously announced US$4.585 billion aggregate debt financing package for the Acquisition is now finalized, and, as such, all commitments under the Bridge Loan Agreement related to the Acquisition have been correspondingly terminated undrawn.

"With today's announcement, we have completed a solid long-term capital structure for the Acquisition," said OpenText CEO & CTO Mark J. Barrenechea. "We now have Micro Focus shareholder approval and a completed capital structure in place. We remain on track to close the Acquisition next quarter and look forward to soon welcoming customers, partners and employees."

The net proceeds from the Notes Offering, borrowings under the Term Loan Facility and OpenText's existing revolving credit facility, and cash on hand will be used to fund the Acquisition.

After giving effect to the Notes Offering and the above noted borrowings, following closing of the Acquisition, OpenText's long-term debt would be approximately US$9.3 billion (consisting of approximately 46% fixed and 54% floating rate debt), with a weighted average interest rate of approximately 5.88% and a weighted average maturity of approximately 6 years. As previously announced, through the combined company's cash generating profile and rapid de-levering plan, OpenText is targeting a net leverage ratio of less than three times within eight quarters following the closing of the Acquisition.

The Notes and the Term Loan Facility are guaranteed on a senior secured basis by OpenText's existing wholly-owned subsidiaries organized in the United States or Canada that borrow or guarantee OpenText's obligations under its senior credit facilities. The Term Loan is also guaranteed on a senior secured basis by Bidco and, concurrent with or within one business day of the closing of the Acquisition, the Notes will be guaranteed on a senior secured basis by Bidco. The Notes and related guarantees are secured with the same priority as OpenText's senior credit facilities.

Further information

This announcement is for information purposes only and is not intended to and does not constitute, or form part of, an offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction, pursuant to the Acquisition or otherwise, nor shall there be any sale, issuance or transfer of securities of OpenText or Micro Focus in any jurisdiction in contravention of applicable law. 

The Notes and related guarantees are not registered under the US Securities Act. The Notes and the related guarantees were issued pursuant to Rule 144A and Regulation S under the US Securities Act. The Notes and related guarantees may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the US Securities Act), except to persons reasonably believed to be qualified institutional buyers in reliance on the exemption from registration provided by Rule 144A under the US Securities Act and to certain persons in offshore transactions in reliance on Regulation S under the US Securities Act. The Notes have not been and will not be qualified for sale to the public by prospectus under applicable Canadian securities laws and, accordingly, any offer and sale of the Notes in Canada will be made on a basis which is exempt from the prospectus requirements of such securities laws. This press release shall not constitute an offer to sell, or the solicitation of an offer to buy, nor shall there be any sale of, any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration, qualification or exemption under the securities laws of any such jurisdiction.

The release, distribution or publication of this announcement in jurisdictions outside the United Kingdom may be restricted by laws of the relevant jurisdictions and therefore persons into whose possession this announcement comes should inform themselves about, and observe, any such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities law of any such jurisdiction.

Barclays Bank PLC, acting through its investment bank, ("Barclays"), which is authorised by the PRA and regulated in the United Kingdom by the FCA and the PRA, is acting exclusively for OpenText and Bidco and no one else in connection with the matters described in this announcement and will not be responsible to anyone other than OpenText and Bidco for providing advice in relation to the Acquisition or any other matter referred to in this announcement.

In accordance with the Code, normal United Kingdom market practice and Rule 14e-5(b) of the U.S. Securities Exchange Act of 1934, as amended, Barclays and its affiliates will continue to act as exempt principal trader in Micro Focus securities on the London Stock Exchange. These purchases and activities by exempt principal traders which are required to be made public in the United Kingdom pursuant to the Code will be reported to a Regulatory Information Service and will be available on the London Stock Exchange website at www.londonstockexchange.com. This information will also be publicly disclosed in the United States to the extent that such information is made public in the United Kingdom.

Publication on a website

This announcement and the documents referred to herein will be available, subject to certain restrictions, on OpenText's website at https://investors.opentext.com/ by no later than 12 noon (London time) on the Business Day following the publication of this announcement. Neither the content of this website nor the content of any other website accessible from hyperlinks in this announcement is incorporated into, or forms part of, this announcement.

About OpenText

OpenText, The Information Company™, enables organizations to gain insight through market leading information management solutions, powered by OpenText Cloud Editions. For more information about OpenText (NASDAQ: OTEX, TSX: OTEX) visit https://www.OpenText.com.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this announcement, including statements regarding OpenText's targeted net leverage ratio and timing thereof, OpenText's plans, objectives, expectations and intentions relating to the Acquisition, the Acquisition's expected contribution to OpenText's results, closing of the Acquisition and certain conditions to be met prior to borrowing under the Term Loan Facility, as well as the expected timing and benefits of the Acquisition, impact on future financial performance including in respect of annual recurring revenues, cloud growth, adjusted EBITDA, cash flows and earnings, may contain words considered forward-looking statements or information under applicable securities laws. These statements are based on OpenText's current expectations, estimates, forecasts and projections about the operating environment, economies and markets in which OpenText operates, as well as the impact of the ongoing COVID-19 pandemic. These statements are subject to important assumptions, risks and uncertainties that are difficult to predict, and the actual outcome may be materially different. OpenText's assumptions, although considered reasonable by OpenText at the date of this announcement, may prove to be inaccurate and consequently its actual results could differ materially from the expectations set out herein. For additional information with respect to risks and other factors, which could occur, see OpenText's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other securities filings with the SEC and other securities regulators. Unless otherwise required by applicable securities laws, OpenText disclaims any intention or obligations to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Copyright © 2022 OpenText. All Rights Reserved. Trademarks owned by OpenText. One or more patents may cover this product(s). For more information, please visit https://www.OpenText.com/patents.