Item 2.01. Completion of Acquisition or Disposition of Assets.
On September 6, 2017, Pharmaceutical Research Associates, Inc., a Virginia corporation (PRA) and a wholly-owned subsidiary of PRA Health Sciences, Inc. (the Company), completed the previously announced acquisition of Symphony Health Solutions Corporation, a Delaware corporation (Symphony Health), pursuant to the Agreement and Plan of Merger (the Merger Agreement), dated as of August 3, 2017, by and among PRA, Symphony Health, Skyhook Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of PRA (Merger Sub), and STG III, L.P., a Delaware limited partnership, solely in its capacity as the representative (the Sellers Representative) of holders of Symphony Healths capital stock and stock options. Pursuant to the Merger Agreement, Merger Sub merged with and into Symphony Health on September 6, 2017 (the Merger), with Symphony Health continuing as the surviving corporation and a wholly-owned subsidiary of PRA.
Pursuant to the Merger Agreement, PRA paid approximately $530 million in cash for the outstanding equity of Symphony Health, which amount is subject to customary post-closing adjustment. Under the Merger Agreement, PRA may be required to make additional payments to the prior equity holders of Symphony Health pursuant to an earnout provision that is based on Symphony Health exceeding financial targets for the twelve month periods ending December 2017 and December 2018.
The Company funded the cash consideration for the Merger with proceeds from borrowings under the Joinder (as defined below). PRA, certain domestic subsidiaries of PRA, as grantors and guarantors, the lenders party thereto and Wells Fargo Bank, National Association (Wells Fargo), as administrative agent and collateral agent, entered into the Joinder Agreement (the Joinder) on September 6, 2017, which amended the Credit Agreement, dated as of December 6, 2016 (the Credit Agreement and, as amended by the Joinder, the Amended Credit Agreement), by and among the Company, PRA, as the borrower, each lender from time to time party thereto and Wells Fargo, as administrative agent, collateral agent, letter of credit issuer and swingline lender. Pursuant to the terms of the Joinder, PRA exercised its right under the Credit Agreement to establish an additional tranche of term loans (the New Term Loan), pursuant to which, on September 6, 2017, PRA borrowed an aggregate principal amount of $550 million to be used to finance the Merger and for general corporate purposes.
The New Term Loan matures on December 6, 2021 and bears interest at a rate equal to LIBOR or the adjusted base rate (ABR), plus a margin based on the ratio of total indebtedness to EBITDA, ranging from 1.25% to 2.00%, in the case of LIBOR rate loans, and 0.25% to 1.00%, in the case of ABR rate loans. Under the terms of the Joinder, the New Term Loan will amortize in equal quarterly installments of an aggregate annual amount equal to 2.5% of the original principal amount of the New Term Loan, with any remaining balance payable at maturity. Other than with respect to the applicable interest rate and amortization schedule, all terms and conditions applicable to the New Term Loan, including provisions governing mandatory and voluntary prepayments, affirmative and negative covenants and events of default and related penalties, are substantially the same as the terms and conditions contained in the Credit Agreement, as previously disclosed in the Companys Current Report on Form 8-K filed with the SEC on December 6, 2016 (the December 2016 8-K).
On September 6, 2016, in connection with the Joinder, Symphony Health, Source Healthcare Analytics, LLC, a wholly-owned subsidiary of Symphony Health, Parallel 6, Inc., a wholly-owned subsidiary of PRA (collectively, the New Subsidiary Guarantors) and Wells Fargo, in its capacity as collateral agent (the Collateral Agent), entered into a supplement (the Guarantee Supplement) to the Guarantee, dated as of December 6, 2016 (the Guarantee), by and among the Company, PRA and certain subsidiaries of PRA (collectively, the Existing Guarantors), in favor of the Collateral Agent. Pursuant to the Guarantee Supplement, the New Subsidiary Guarantors unconditionally guarantee the obligations under the Amended Credit Agreement, on substantially the same terms as set forth in the Guarantee, as previously disclosed in the December 2016 8-K.
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