Item 1.01.
Entry into a Material Definitive Agreement.
On July 12, 2017, in connection with the closing of the acquisition of
LifeWatch AG (LifeWatch), a Swiss corporation (as described below), BioTelemetry, Inc. (the Company) entered into a Credit Agreement (the Credit Agreement) with Suntrust Bank, as agent (the Agent) for the lenders (the Lenders), and as a Lender and swingline lender. Pursuant to the Credit Agreement, the Lenders agreed to make loans (the Loans) to the Company as follows; (i) a term loan (funded on July 12, 2017) in an aggregate principal amount equal to $205,000,000, the proceeds of which were used to (a) refinance existing indebtedness of the Company and its subsidiaries (including indebtedness of LifeWatch) in the amount of approximately $28,000,000, (b) pay a portion of the consideration for the acquisition of LifeWatch, and (c) pay related transaction fees and expenses of the acquisition of LifeWatch; and (ii) a $50,000,000 revolving credit facility for ongoing working capital purposes, which remains undrawn.
The Loans bear interest at an annual rate, at the election of the Company, of (i) with respect to LIBOR rate loans, LIBOR plus the applicable margin and (ii) with respect to base rate loans, the Base Rate (the prime rate as published in the Wall Street Journal plus the applicable margin). The applicable margin is determined by reference to the Companys Consolidated Total Net Leverage Ratio, as defined in the Credit Agreement. Currently, the applicable margin is 2.00% for LIBOR loans and 1.00% for base rate loans.
The outstanding principal of the loan will be paid as follows:
·
Beginning January 1, 2018, the principal amount of the term loan will be repaid, on a quarterly basis, in installments of $512,500, plus accrued interest;
·
Beginning January 1, 2019, the principal amount of the term loan will be repaid, on a quarterly basis, in installments of $1,281,250, plus accrued interest;
·
Beginning January 1, 2020, the principal amount of the term loan will be repaid, on a quarterly basis, in installments of $3,843,750, plus accrued interest;
·
Beginning January 1, 2021, the principal amount of the term loan will be repaid, on a quarterly basis, in installments of $5,125,000, plus accrued interest;
·
The remaining principal balance will be repaid on or before July 12, 2022 (or such earlier date upon an acceleration of the Loans by Lenders upon an event of default or termination by the Company).
The Credit Agreement contains customary affirmative and financial covenants regarding the operations of the Companys business and customary negative covenants that, among other things, limit the ability of the Company to incur additional indebtedness, grant certain liens, make certain investments, merge or consolidate, make certain restricted payments and engage in certain asset dispositions, including a sale of all, or substantially all, of its property.
The Credit Agreement contains events of default that entitle the Lenders to declare a default and accelerate the Companys obligations under the Credit Agreement and require repayment of the Loans and increase the applicable finance charge or interest rate by an additional 2.0% per annum. These events of default include, among others, any breach of payment obligations or covenants, defaults in payment of other outstanding debt, material misrepresentations, events constituting a material adverse change, the Companys failure to remain publicly traded, and bankruptcy and insolvency defaults. Upon the occurrence of a bankruptcy or insolvency default and after giving effect to any applicable grace periods in the Credit Agreement, the Loans immediately become due and payable without demand, notice or legal process of any kind.
The Loans are secured by substantially all of the assets of the Company and by a pledge of the capital stock of the Companys U.S. based subsidiaries as well as a pledge of 65% of the capital stock of its first tier material foreign subsidiaries, including 65% of the capital stock the Company owns of LifeWatch.
2