Item 1.01
Entry into a Material Definitive Agreement.
On June 9, 2017, The Spectranetics Corporation, a Delaware corporation (the “Company”), entered into (i) an amended and restated term credit and security agreement (the “Term Loan Credit Agreement”), dated June 9, 2017 (the “Closing Date”), by and among the Company and AngioScore Inc., as borrowers (jointly, the “Borrowers”), MidCap Financial Trust, as administrative agent (the “Term Administrative Agent”) and as a lender, and the other lenders party thereto and (ii) an amended and restated revolving credit and security agreement (the “Revolving Loan Credit Agreement”, and together with the Term Loan Credit Agreement, the “Credit Agreements”), dated the Closing Date, by and among the Borrowers, MidCap Funding IV Trust, as administrative agent (the “Revolving Administrative Agent” and, together with the Term Administrative Agent, the “Agents”) and the lenders party thereto. The Credit Agreements replace the Term Credit and Security Agreement (the “Original Term Loan Credit Agreement”) and the Revolving Credit and Security Agreement (the “Original Revolving Loan Credit Agreement and, together with the Original Term Loan Credit Agreement, the “Original Credit Agreements), each dated December 7, 2015, by and among the Borrowers, MidCap Financial Trust, as administrative agent and the other lenders party thereto. The Term Loan Credit Agreement provides for a $90 million term loan facility (the “Term Loan Facility”) and the Revolving Loan Credit Agreement provides for a $50 million revolving loan facility (the “Revolving Loan Facility” and together with the “Term Loan Facility”, the “Facilities”). Both Facilities expire on March 1, 2021. The Revolving Loan Facility may be increased to up to $70 million at the Company’s request and with approval of the Revolving Administrative Agent and the Revolving Loan Facility lenders. The obligations of the Borrowers under the Credit Agreements are secured by a lien on substantially all of the assets of the Borrowers.
The Term Loan Facility bears interest at the LIBOR Rate (as defined in the Term Loan Credit Agreement) plus an applicable margin of 7.15% per annum; provided that the applicable margin will be reduced to 5.95% if the Company’s EBITDA (as defined in the Term Loan Credit Agreement) is equal to or greater than $12,500,000 for a specified prior period and certain other conditions are met. The Borrowers may prepay all or a portion of the Term Loan Facility subject to certain conditions and a prepayment fee of (i) 3.0% of the amount of the Term Loan Facility prepaid in the first year following the Closing Date and (ii) 2.0% of the amount of the Term Loan Facility prepaid thereafter. The Term Loan Facility is subject to an exit fee of 4.0% of the amount advanced under the Term Loan Facility. Interest-only payments are due during the first 24 months of the Term Loan Facility, with principal payments beginning thereafter in equal monthly installments until maturity.
Amounts drawn under the Revolving Loan Facility bear interest at the LIBOR Rate (as defined in the Revolving Loan Credit Agreement) plus 4.45% per annum, while the undrawn portion is subject to an unused line fee of 0.50% per annum. The Revolving Loan Facility is subject to a minimum balance, such that the Borrowers pay the greater of (i) interest accrued on the actual amount drawn under the Revolving Loan Facility and (ii) interest accrued on 50% of the average Borrowing Base (as defined in the Revolving Loan Credit Agreement).
Under the Credit Agreements, the Borrowers are required to maintain minimum cash and cash equivalents of no less than $10 million, maintain net revenues in excess of certain specified minimum Net Revenue (as defined in the Credit Agreements) thresholds and make certain customary representations and covenants. The Credit Agreements also contain customary events of default, including payment and covenant defaults, breaches of certain representations and warranties, cross defaults to certain material indebtedness, certain events of bankruptcy and insolvency, certain events under ERISA, material judgments, breaches of material contracts and events resulting in a material adverse effect. If an event of default occurs and is not cured within any applicable grace period or is not waived, the applicable Agent and the lenders are entitled to take various actions, including, without limitation, the acceleration of amounts due under the applicable Credit Agreement, the suspension or termination of commitments under the Credit Agreements and the exercise of remedies under the Uniform Commercial Code with respect to the collateral securing the obligations of the Borrowers under the Credit Agreements. Upon the occurrence of an event of default, the Borrowers’ obligations under the Credit Agreements may at the election of the applicable Agent or the lenders, or in the event of insolvency or bankruptcy will automatically, bear interest at rates that are 2.0% per annum in excess of the rates otherwise payable under the Credit Agreements.
The Company drew $90 million under the Term Loan Facility and approximately $30.8 million under the Revolving Loan Facility on the Closing Date. Proceeds from the Term Loan Facility and Revolving Loan Facility were used to refinance approximately $90.8 million outstanding under the Original Credit Agreements, to pay an exit fee under the Original Term Loan Credit Agreement and to pay certain other fees and expenses, and for general working capital and corporate purposes.
The foregoing description of the Credit Agreements is qualified in its entirety by reference to the full text of the Credit Agreements, which are filed as Exhibit 10.1 and Exhibit 10.2 to this report and are incorporated by reference herein.