| Item 1.01 |
Entry into a Material Definitive Agreement. |
On January 19, 2024, MiMedx Group, Inc. (the “Company”) entered into a Credit Agreement (the “Credit Agreement”) with the lenders party thereto (the “Lenders”) and Citizens Bank, N.A., as administrative agent (the “Agent”). All obligations of the Company under the Credit Agreement are guaranteed by certain of the Company’s subsidiaries (collectively, the “Guarantors”) and secured by substantially all of the assets of the Company and the Guarantors pursuant to a customary security agreement.
The Credit Agreement provides for senior secured credit facilities in an aggregate principal amount of up to $95.0 million consisting of: (i) a $75.0 million senior secured revolving credit facility (the “Revolving Credit Facility”) with a $10.0 million letter of credit sublimit and a $10.0 million swingline loan sublimit, and (ii) a $20.0 million senior secured term loan facility (the “Term Loan Facility” and, together with the Revolving Credit Facility, the “Credit Facilities”). Subject to the terms of the Credit Agreement, the Company has the option to obtain one or more incremental term loan facilities and/or increase the commitments under the Revolving Credit Facility in an aggregate principal amount equal to the greater of (i) $50.0 million and (ii) 1.00 times the Consolidated EBITDA (as defined in the Credit Agreement), each subject to the existing or any new lenders’ election to extend additional term loans or revolving commitments. All obligations are required to be paid in full on January 19, 2029 (the “Maturity Date”).
At the Company’s option, borrowings under the Credit Agreement (other than any swingline loan) will bear interest at rate per annum equal to (i) the Alternate Base Rate (as defined in the Credit Agreement), or (ii) a Term SOFR (as defined in the Credit Agreement), in each case plus an applicable margin ranging from 1.25% and 2.50% with respect to Alternate Base Rate borrowings and 2.25% and 3.50% for Term SOFR borrowings. Swingline loans will bear interest at a rate per annum equal to one-month Term SOFR plus the applicable margin. The applicable margin will be determined based on the Company’s consolidated total net leverage ratio. Borrowings accruing interest at the Alternate Base Rate are payable monthly in arrears and borrowings accruing interest at Term SOFR are payable on the last day of the interest period, which such period may be one, three or six months, at the Company’s election.
The Company is required to pay (i) a quarterly commitment fee on any unused portion of the Revolving Credit Facility, which such fees range from 0.25% and 0.50% per annum based on the Company’s consolidated total net leverage ratio, (ii) letter of credit fees based on an applicable margin ranging from 2.25% and 3.50% per annum, and (iii) certain other customary issuance, presentation, amendment and other processing fees to the Agent and the Lenders.
The Term Loan Facility will amortize on a quarterly basis at 1.25% (for year one and two), 1.875% (for year three and four), and 2.5% (for year five) based on the aggregate principal amount outstanding under the Term Loan Facility, with the remainder due on the Maturity Date. The Company must make mandatory prepayments in connection with certain asset dispositions and casualty events, subject in each case to customary reinvestment rights. The Company may prepay borrowings under the Credit Facilities at any time, without premium or penalty, and may, at its option, reduce the aggregate unused commitments under the Revolving Credit Facility in whole or in part, in each case subject to the terms of the Credit Agreement.
The Credit Agreement contains customary representations, warranties and covenants. The Company must comply with certain financial covenants including, a maximum total net leverage ratio and a minimum consolidated fixed charge coverage ratio. Additionally, the Credit Agreement includes certain customary restrictive covenants, including, but not limited to, limitations on indebtedness, liens, fundamental changes, dispositions, investments, loans, advances, guarantees, acquisitions, dividends and other restricted payments, transactions with affiliates, swap transactions, sale and leaseback transactions, prepayments on subordinated debt, and amendments to organizational and other material agreements.
The Credit Agreement also contains certain customary events of default, including, without limitation, (i) failure to pay interest or principal when due, (i) failure to provide notice of certain material events or (iii) failure to perform or observe certain covenants under the Credit Agreement or any Loan Documents (subject to a 30-day grace period in certain circumstances). If an event of default occurs and is continuing, the Agent may, and at the direction of the Lenders, take one or more of the following actions: (i) terminate the commitments, (ii) declare any amounts outstanding immediately due and payable, and (iii) exercise any other right the Agent has under the Credit Agreement or at law.
On January 19, 2024, the Company borrowed $30.0 million under the Revolving Credit Facility and $20.0 million under the Term Loan Facility. Proceeds from the initial drawings under the Credit Facilities and cash on hand were used to repay in full outstanding obligations owing under that certain Loan Agreement, dated as of June 30, 2020 (as