Item 1.01. Entry into a Material Definitive Agreement.
On January 5, 2024 (the “Closing Date”), AtriCure, Inc. (the “Company”) and its wholly owned subsidiary, AtriCure, LLC (together with the Company, the “Borrowers”), entered into an asset-based credit agreement (the “Credit Agreement”) among the Borrowers, JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Administrative Agent”), JPMorgan Chase Bank, N.A. (“JPMCB”) and Silicon Valley Bank, a Division of First-Citizen Bank & Trust Company (“SVB”), as Joint Lead Arrangers and Joint Bookrunners, and the lenders party thereto (“Lenders”).
The Credit Agreement provides for an asset-based three-year revolving credit facility (the “ABL Facility”) in an amount of up to $125 million. Borrowers may, at their option, and subject to customary conditions, request an increase in the revolving commitment by up to $40 million (not to exceed a total of $165 million) by obtaining additional commitments from one or more Lenders or with the consent of JPMCB. A portion of the ABL Facility not in excess of $5 million is available for the issuance of letters of credit in U.S. dollars by JPMCB or other financial institutions. The Administrative Agent, in its sole discretion, may create swingline loans (the “Swingline Loans”) by advancing to the Borrowers, on behalf of the Lenders, floating rate revolving loans requested by Borrowers. Any such Swingline Loans will reduce availability under the ABL Facility on a dollar-for-dollar basis.
The proceeds of the ABL Facility will be used to finance the Company’s working capital needs and for general corporate purposes. Proceeds also were used to refinance the Company’s indebtedness under the Loan and Security Agreement dated as of February 23, 2018, by and among SVB, the Company and certain subsidiaries (as amended, the “SVB Facility”). The SVB Facility terminated on the Closing Date.
The ABL Facility is secured by a first priority perfected security interest (subject to customary exceptions) in all of the assets of the Borrowers, whether consisting of personal, tangible or intangible property, including all of the outstanding equity interests of the Company’s direct subsidiaries (limited, in the case of foreign subsidiaries, to 65% of the equity interest of such foreign subsidiaries (i) to the extent a pledge or greater percentage could reasonably be expected to result in material tax consequences and (ii) so long as Lenders’ ability to be repaid in full will not be impaired). Each Borrower and each direct and indirect Material Domestic Subsidiary of the Company (each a “Guarantor”) has unconditionally guaranteed all of the indebtedness, obligations and liabilities of the Borrowers arising under the ABL Facility. At the time of closing the ABL Facility, the Borrowers are the only Guarantors.
Amounts available to be drawn from time to time under the ABL Facility are determined by calculating the applicable borrowing base, which is based upon applicable percentages of the values of eligible domestic accounts receivable, eligible inventory, eligible liquid assets, less reserves as determined by the Administrative Agent, all as specified in the Credit Agreement. Outstanding amounts under the Credit Agreement bear interest at a rate per annum equal to, at the applicable Borrower’s election: (i) an alternate base rate (“ABR”) plus an applicable margin or (ii) an adjusted term SOFR rate plus an applicable margin. All Swingline loans bear interest at a rate per annum equal to the ABR plus the applicable margin under the Credit Agreement.
Subject to customary exceptions and restrictions, the Company may voluntarily prepay outstanding amounts under the ABL Facility at any time without premium or penalty. Any voluntary prepayments made will not reduce commitments under the ABL Facility. The Credit Agreement contains mandatory prepayment provisions which require prepayment of amounts outstanding under the ABL Facility (i) upon the receipt of proceeds from the issuance of any non-permitted indebtedness and (ii) when there is an Availability shortfall under the ABL Facility.
The Credit Agreement contains customary representations and warranties, events of default and financial, affirmative and negative covenants for facilities of this type, including but not limited to financial covenants relating to a fixed charge coverage ratio, a minimum liquidity requirement and a minimum excess availability requirement, and restrictions on indebtedness, liens, investments and acquisitions, asset dispositions, specified agreements, restricted payments and prepayment of certain indebtedness.
The above description of the Credit Agreement is not complete and is qualified in its entirety by the actual terms of the Credit Agreement, a copy of which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
Item 1.02. Termination of a Material Definitive Agreement.
The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
