Item 1.01 Entry into a Material Definitive Agreement.
On July 7, 2021 (the “Effective Date”), a wholly-owned subsidiary of Avantor, Inc. (the “Company”), Avantor Funding, Inc. (the “Borrower”) entered into Amendment No. 7 (the “Credit Agreement Amendment”) to the Credit Agreement, dated as of November 21, 2017 (as amended by Amendment No. 1 to Credit Agreement, dated as of November 27, 2018, Amendment No. 2 to Credit Agreement, dated as of June 18, 2019, Amendment No. 3 to Credit Agreement, dated as of January 24, 2020, Amendment No. 4 to Credit Agreement, dated as of July 14, 2020, Amendment No. 5 to Credit Agreement, dated as of November 6, 2020 and Amendment No. 6 to Credit Agreement, dated as of June 10, 2021, and as further amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Credit Agreement”), among Vail Holdco Sub LLC, the Borrower, each of the Guarantors, Goldman Sachs Bank USA, as administrative agent and collateral agent (the “Administrative Agent”), Swing Line Lender and an L/C Issuer, the lenders party thereto (the “Lenders”) and Bank of America, N.A., as the Additional Initial B-4 Dollar Term Lender and as the Additional Incremental B-5 Dollar Term Lender.
Pursuant to the Credit Agreement Amendment, the Borrower obtained a $357.2 million tranche of senior secured U.S. dollar term loans (the “Initial B-4 Dollar Term Loans”) and a $1,169.1 million tranche of senior secured U.S. dollar term loans (the “Incremental B-5 Dollar Term Loans” and, together with the Initial B-4 Dollar Term Loans, the “Amendment No. 7 Term Loans”). The Initial B-4 Dollar Term Loans bear interest at a rate of LIBOR plus a spread of 2.00% per annum (or the alternate base rate plus 1.00% per annum) and the Incremental B-5 Dollar Term Loans bear interest at a rate of LIBOR plus a spread of 2.25% (or the alternate base rate plus 1.25% per annum) and are each subject to a 0.50% LIBOR “floor”. The Initial B-4 Dollar Term Loans replaced and refinanced certain of the Borrower’s existing senior secured U.S. dollar term loans, which had an effective interest rate of LIBOR plus a spread of 2.00% per annum (or the alternate base rate plus 1.00% per annum), as the Borrower had triggered a 25 basis point step-down from the initial interest rate by achieving a certain Consolidated First Lien Net Leverage Ratio (as defined in the Credit Agreement) and a 1.00% LIBOR “floor”, that were scheduled to mature on November 21, 2024. The Incremental B-5 Dollar Term Loans replaced and refinanced certain of the Borrower’s existing senior secured U.S. dollar term loans, which had an effective interest rate of LIBOR plus a spread of 2.25% per annum (or the alternate base rate plus 1.25% per annum), as the Borrower had triggered a 25 basis point step-down from the initial interest rate by achieving certain ratings and a 1.00% LIBOR “floor”, that were scheduled to mature on November 6, 2027.
The final stated maturity of the Initial B-4 Dollar Term Loans is November 21, 2024. The final stated maturity of the Incremental B-5 Dollar Term Loans is November 6, 2027. In addition, the Credit Agreement Amendment provides that in the event the Borrower prepays, replaces or refinances all or a portion of either tranche of Amendment No. 7 Term Loans at any time prior to the six month anniversary of the Effective Date with any indebtedness under credit facilities in the form of similar term B loans that are broadly marketed or syndicated to banks and other institutional investors incurred primarily for the purpose of repaying, replacing or refinancing such tranche of Amendment No. 7 Term Loans at an effective yield that is less than the effective yield of such tranche of Amendment No. 7 Term Loans (excluding any indebtedness incurred in connection with a change of control or certain transformative acquisitions), a prepayment premium equal to 1% of the principal amount of such tranche Amendment No. 7 Term Loans being prepaid or 1% of the principal amount of the Amendment No. 7 Term Loans outstanding immediately prior to such amendment will be imposed on the Borrower.
The Amendment No. 7 Term Loans are guaranteed by the same subsidiaries of the Company that guarantee the existing credit facilities under the Credit Agreement. The Amendment No. 7 Term Loans
and the guarantees thereof are secured by the same collateral of the Borrower and the Guarantors that secures the Borrower’s obligations under the Credit Agreement on a pari passu basis.
In addition, the Administrative Agent, certain of the lenders and/or their respective affiliates have provided the Borrower and its affiliates with financial advisory, commercial banking and investment banking services for which they received customary fees and expenses.
The foregoing is a summary of the material terms of the Credit Agreement Amendment, does not purport to be complete, and is qualified in its entirety by reference to the Credit Agreement Amendment, a copy of which is attached as Exhibit 10.1 to this Current Report on Form 8-K, which is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation under an Off-Balance Sheet Arrangement of Registrant.
The information set forth in Item 1.01 is incorporated into this Item 2.03 by reference.