| Item 1.01 | Entry into a Material Definitive Agreement. |
On June 28, 2024, Zimmer Biomet Holdings, Inc. (the “Company”) entered into a new five-year revolving credit agreement and a new 364-day revolving credit agreement, as described below.
The Five-Year Revolving Credit Agreement, dated as of June 28, 2024, among the Company, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (the “Five-Year Credit Agreement”), is a five-year unsecured revolving facility of $1.5 billion (the “Five-Year Revolving Facility”). The Five-Year Credit Agreement will mature on June 28, 2029, with two one-year extensions exercisable at the Company’s discretion and subject to required lender consent. The Five-Year Credit Agreement also includes an uncommitted incremental feature allowing the Company to request an increase of the facility by an aggregate amount of up to $500.0 million. Borrowings under the Five-Year Revolving Facility will be used for general corporate purposes.
Borrowings under the Five-Year Credit Agreement will bear interest at floating rates, based upon either an adjusted Term secured overnight financing rate (“SOFR”) for the applicable interest period or an alternate base rate, in each case, plus an applicable margin determined by reference to the Company’s senior unsecured long-term debt credit rating. The Company will pay a facility fee on the aggregate amount of the Five-Year Revolving Facility at a rate determined by reference to the Company’s senior unsecured long-term debt credit rating.
The Five-Year Credit Agreement contains customary affirmative and negative covenants and events of default for unsecured financing arrangements, including, among other things, limitations on consolidations, mergers, and sales of assets. The Five-Year Credit Agreement also requires that the Company maintain a consolidated indebtedness to consolidated EBITDA ratio of no greater than 4.5 to 1.0 as of the last day of any period of four consecutive fiscal quarters (with such ratio subject to increase to 5.0 to 1.0 in connection with a qualified material acquisition and certain other restrictions).
The 364-Day Revolving Credit Agreement, dated as of June 28, 2024, among the Company, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (the “364-Day Credit Agreement”), is an unsecured revolving credit facility in the principal amount of $1.0 billion (the “364-Day Revolving Facility”). The 364-Day Credit Agreement will mature on June 27, 2025, and borrowings under the 364-Day Revolving Facility will be used for general corporate purposes.
Borrowings under the 364-Day Credit Agreement will bear interest at floating rates based upon either an adjusted Term SOFR for the applicable interest period or an alternate base rate, in each case, plus an applicable margin determined by reference to the Company’s senior unsecured long-term debt credit rating. The Company will pay a facility fee on the aggregate amount of the 364-Day Revolving Facility at a rate determined by reference to its senior unsecured long-term debt credit rating.
The 364-Day Credit Agreement contains customary affirmative and negative covenants and events of default for an unsecured financing arrangement, including, among other things, limitations on consolidations, mergers and sales of assets. The 364-Day Credit Agreement also requires that the Company maintain a consolidated indebtedness to consolidated EBITDA ratio of no greater than 4.5 to 1.0 as of the last day of any period of four consecutive fiscal quarters (with such ratio subject to increase to 5.0 to 1.0 in connection with a qualified material acquisition and certain other restrictions).
The foregoing descriptions of the Five-Year Credit Agreement and the 364-Day Credit Agreement are qualified in their entirety by reference to the full text of the Five-Year Credit Agreement and the 364-Day Credit Agreement, which are filed as Exhibit 10.1 and Exhibit 10.2 hereto, respectively, and are incorporated herein by reference.
In the ordinary course of business, certain of the lenders under the Five-Year Credit Agreement and/or the 364-Day Credit Agreement and their affiliates have provided, and may in the future provide, investment banking, commercial banking, cash management, foreign exchange or other financial services to the Company and its affiliates for which they have received, and may in the future receive, compensation.
