Upland Software, Inc.UPLD
Upland Software, Inc. Debt Disclosure
7. Debt
Long-term debt consisted of the following at December 31, 2024 and December 31, 2023 (in thousands):
| December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
Senior secured loans (includes unamortized discount of $3,456 and $5,376 based on an imputed interest rate of 6.6% and 7.6%, at December 31, 2024 and December 31, 2023, respectively) | $ | 290,194 | $ | 476,674 | |||||||
| Less current maturities | (3,224) | (3,172) | |||||||||
| Total long-term debt | $ | 286,970 | $ | 473,502 | |||||||
Credit Facility
In 2019, the Company entered into a credit agreement (the “Credit Facility”) which provided for (i) fully-drawn, 7 year, senior secured term loans for $350 million and $190 million maturing August 6, 2026 (the “Term Loans”) and (ii) a $60 million, 5 year, revolving credit facility (the “Revolver”) which matured August 6, 2024.
Payment terms
The Term Loans are repayable on a quarterly basis by an amount equal to 0.25% (1.00% per annum) of the aggregate principal amount of such loan. Any amount remaining unpaid is due and payable in full on August 6, 2026.
At the option of the Company, the Term Loans accrue interest at a per annum rate based on (i) the Base Rate (as defined below) plus a margin of 2.75% or (ii) the Term SOFR Reference Rate plus the Term SOFR Adjustment (not less than 0.00%) published by CME Group Benchmark Administration Limited (CBA), or as otherwise determined in accordance with the Credit Facility (based on a period equal to 1, 2, 3 or 6 months or, if available and agreed to by all relevant Lenders and the Agent, 12 months or such period of less than 1 month) plus a margin of 3.75%. The Base Rate for any day was a rate per annum equal to the greatest of (i) the prime rate in effect on such day, (ii) the Federal Funds Effective Rate (not less than 0.00%) in effect on such day plus ½ of 1.00%, and (iii) the Federal Funds Effective Rate for a one month interest period beginning on such day plus 1.00%. Accrued interest is paid quarterly or, with respect to Term Loans that are accruing interest based on the Federal Funds Effective Rate, at the end of the applicable interest rate period. At December 31, 2024, the floating interest rate was 8.2%.
On August 15, 2024, the Company prepaid $175.0 million of the Term Loans and from September 30, 2024 through December 31, 2024, the Company prepaid an additional $8.0 million in principal payments. On August 31, 2023, the Company prepaid $35.0 million of the Term Loans.
Revolver
The Revolver matured August 6, 2024. Loans under the Revolver could be borrowed, repaid and reborrowed until maturity, at which time all amounts borrowed under the Revolver must be repaid. No amounts were drawn on the Revolver at the time of its maturity.
Covenants
The Credit Facility contains customary affirmative and negative covenants. The Term Loan and Revolver are secured by substantially all of the Company's assets.
As of December 31, 2024 the Company was in compliance with all covenants under the Credit Facility.
Interest rate swaps
In 2019, the Company entered into floating-to-fixed interest rate swap agreements to limit exposure to interest rate risk related to our debt. Until the termination of a portion of the interest rate swaps as described below, these interest rate swaps effectively converted the entire balance of the Company's original principal Term Loans from variable interest payments to fixed interest rate payments, based on an annualized fixed rate of 5.4%, for the term of debt.
In August 2023, the Company sold $259.9 million of the notional amount of its interest rate swap assets back to the counterparties for $20.5 million. At that time, a $20.5 million gain was recorded in accumulated other comprehensive income related to the notional amount sold. That gain is being released to interest expense, net as interest is accrued on the Company’s variable-rate debt over the remaining term of the Term Loans as a decrease to interest expense, net.
In August 2024, the Company prepaid $175.0 million of the Term Loans resulting in the release of $9.0 million of the deferred gain to interest expense, net and from September 30, 2024 through December 31, 2024, the Company prepaid an additional $8.0 million in principal payments resulting in the additional release of $0.4 million of the deferred gain to interest expense, net. In August 2023, the Company prepaid $35.0 million of the Term Loans. As a result of this prepayments, $2.8 million of the deferred gain in accumulated comprehensive income was released immediately into earnings as interest expense, net in 2023.
In August 2024, the Company de-designated all of the interest rate swaps in conjunction with the August 2024 debt prepayment. The amount remaining in accumulated other comprehensive loss at the de-designation date was $11.4 million and is being amortized to interest expense, net over the effective period of the original interest rate swap agreements. Subsequent to the de-designation, changes in the fair value of the interest rate swaps are recorded to interest expense, net. Net change in fair value of the interest rate swaps recognized in interest expense, net for the year ended December 31, 2024 was expense of $1.6 million.
Amounts reported in accumulated other comprehensive loss related to the Company's derivatives are reclassified to interest expense, net as interest is accrued on the Company’s variable-rate debt or prepayments on the Term Loans are made. The impact of the Company’s derivative financial instruments on its consolidated statements of comprehensive loss was as follows (in thousands):
| Year Ended December 31 | ||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||
| Unrealized gain (loss) recognized in Other comprehensive income (loss) on interest rate swaps | $ | (2,918) | $ | (6,434) | $ | 49,577 | ||||||||||||||
| Amounts reclassified from Accumulated other comprehensive income (loss) to interest expense, net | (15,868) | (5,289) | — | |||||||||||||||||
Total Other comprehensive income (loss) on interest rate swaps | $ | (18,786) | $ | (11,723) | $ | 49,577 | ||||||||||||||
In the next twelve months, assuming no additional prepayments, the Company estimates that $6.3 million will be reclassified from Accumulated other comprehensive income (loss) to Interest expense, net on our consolidated statement of operations.
Cash interest costs averaged 6.6%, 7.2%, and 5.4% for the years ended December 31, 2024, 2023, and 2022, respectively. As of December 31, 2024, the Company had $3.5 million of unamortized debt issuance costs associated with the Credit Facility. These issuance costs will be amortized to Interest expense, net on our consolidated statement of operations, over the term of the Credit Facility.
Debt Maturities
Under the terms of the Credit Facility, future debt maturities of long-term debt excluding debt discounts at December 31, 2024 are as follows (in thousands):
| Year ending December 31: | Amount | |||||||
| 2025 | $ | 5,400 | ||||||
| 2026 | 288,250 | |||||||
| Total debt outstanding | $ | 293,650 | ||||||
| Less unamortized discount | 3,456 | |||||||
| Total debt outstanding, net of discount | $ | 290,194 | ||||||
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.