DEBT

On March 3, 2015, Ubiquiti Networks, Inc. and Ubiquiti International Holding Company Limited (the “Cayman Borrower”) amended and restated its prior credit agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association (“Wells Fargo”), the other financial institutions named as lenders therein, and Wells Fargo as administrative agent for the lenders. The Credit Agreement provides for a $200.0 million senior secured revolving credit facility ("Revolving Facility") and a $100.0 million senior secured term loan facility ("Term Facility", together with the Revolving Facility, the “Facilities”), with an option to request increases in the amounts of such Facilities by up to an additional $50.0 million in the aggregate (any such increase to be in each lender’s sole discretion). The Credit Agreement, matures on March 3, 2020. The Facilities replaced the Company’s $150.0 million senior secured revolving credit facility under its prior credit agreement. The $100.0 million term loan facility of the Credit Agreement was fully drawn at closing of the Credit Agreement, and $72.3 million was used to repay the outstanding balance under its prior credit agreement. The Facilities are available for working capital and general corporate purposes that comply with the terms of the Credit Agreement.

Our Debt consisted of the following (in thousands):



	March 31, 2017			June 30, 2016
Term Loan - short term	$	15,000		$	11,250
Debt issuance costs, net (1)	(257		)	(257		)
Total Debt - short term	14,743			10,993
Term Loan - long term	65,000			76,250
Revolver - long term	146,000			116,000
Debt issuance costs, net (1)	(493		)	(686		)
Total Debt - long term	$	210,507		$	191,564

(1) On July 1 2016, the Company retrospectively adopted ASU 2015-03, which requires unamortized debt issuance costs to be included as a direct deduction from the related debt liability on the balance sheet. Under previous guidance, all unamortized debt issuance costs were reported as assets on the balance sheet. See Note 2 for information on the impact of the retrospective adoption of ASU 2015-03.

As of March 31, 2017, the interest rate on the term loan was 2.65%. The table below shows the respective interest rates as of March 31, 2017 in addition to interest rate reset dates and rates as available for each revolver draw.



	Interest Rate as of
Debt Payment Obligations	March 31, 2017	Rate Reset Date	Reset Rate
$15 Million Revolver	2.51%	4/10/2017	#
$18 Million Revolver	2.52%	7/18/2017	2.66%
$16 Million Revolver	2.53%	5/15/2017	*
$19 Million Revolver	2.50%	4/3/2017	#
$48 Million Revolver	2.55%	5/30/2017	*
$30 Million Revolver	2.93%	9/15/2017	*

* - Reset rate not available as of filing date.

# - Revolver repaid subsequent to March 31, 2017

The Revolving Facility includes a sub-limit of $10.0 million for letters of credit and a sub-limit of $25.0 million for swingline loans. Under the Credit Agreement, revolving loans and swingline loans may be borrowed, repaid and reborrowed until March 3, 2020, at which time all amounts borrowed must be repaid. The term loan is payable in quarterly installments of 2.50% of the original principal amount of the term loan until March 31, 2017, thereafter increasing to 3.75% of the original principal amount of the term loan, in each case plus accrued and unpaid interest. Revolving, swingline and term loans may be prepaid at any time without penalty.

Revolving and term loans bear interest, at the Company’s option, at either (i) a floating rate per annum equal to the base rate plus a margin of between 0.50% and 1.25%, depending on the Company’s leverage ratio as of the most recently ended fiscal quarter or (ii) a floating per annum rate equal to the applicable LIBOR rate for a specified period, plus a margin of between 1.50% and 2.25%, depending on the Company’s leverage ratio as of the most recently ended fiscal quarter. Swingline loans bear interest at a floating rate per annum equal to the base rate plus a margin of between 0.50% and 1.25%, depending on the Company’s leverage ratio as of the most recently ended fiscal quarter.

The Credit Agreement requires the Company to maintain during the term of the Facilities (i) a maximum leverage ratio of 2.50 to 1.00 and (ii) minimum liquidity of $225.0 million, increasing to $250.0 million in the event of an incremental increase in the size of the Facilities, which can be satisfied with unrestricted cash and cash equivalents and up to $50.0 million of availability under the Revolving Facility. In addition, the Credit Agreement contains customary affirmative and negative covenants and includes customary events of default. The occurrence of an event of default could result in the acceleration of the obligations under the Credit Agreement.

The obligations of Ubiquiti Networks, Inc. and certain domestic subsidiaries, if any, under the Credit Agreement are required to be guaranteed by such domestic subsidiaries (the “Domestic Guarantors”) and are collateralized by substantially all assets (excluding intellectual property) of Ubiquiti Networks, Inc. and the Domestic Guarantors. The obligations of the Cayman Borrower and certain foreign subsidiaries under the Credit Agreement are required to be guaranteed by certain domestic and material foreign subsidiaries (the “Guarantors”) and are collateralized by substantially all assets (excluding intellectual property) of the Cayman Borrower and the Guarantors.

During the three months ended March 31, 2017, the Company made a payment of $3.0 million against the balance under the Term Facility, of which $2.5 million was a repayment of principal and $0.5 million was payment of interest. During the nine months ended March 31, 2017, the Company made aggregate payments of $9.0 million against the balance under the Term Facility, of which $7.5 million was a repayment of principal and $1.5 million was payment of interest.

During the three months ended March 31, 2017, the Company made a payment of $0.7 million of interest under the Revolving Facility. During the nine months ended March 31, 2017, the Company made aggregate payments of $2.2 million of interest under the Revolving Facility.

On September 2, 2015, the Company accessed a letter of credit under its Revolving Facility in the amount of $0.2 million for the benefit of the landlord pursuant to a new lease of office space. The landlord can draw against the letter of credit in the event of a lease default by the Company. The letter of credit expires on September 2, 2017, subject to automatic renewal for additional one-year periods.

The following table summarizes our estimated debt and interest payment obligations as of March 31, 2017, for the remainder of fiscal 2017 and future fiscal years (in thousands):



	2017 (remainder)		2018		2019		2020		2021		Thereafter		Total
Debt payment obligations	$	3,750	$	15,000	$	15,000	$	192,250	$	—	$	—	$	226,000
Interest and other payments on debt payment obligations⁽¹⁾	1,516		5,820		5,418		3,468		—		—		16,222
Total	$	5,266	$	20,820	$	20,418	$	195,718	$	—	$	—	$	242,222

(1) - Interest payments are calculated based on the applicable rates and payment dates as of March 31, 2017. Furthermore, two to three-month payment intervals on the revolving debt have been assumed, consistent with the Company's elections to date.