| Financing Arrangements | 8. Financing Arrangements
On March 30, 2017, the Company refinanced its previous
$365.0 million seven-year term loan agreement (the facility
thereunder, the “2015 Term Facility”) with a new
five-year $275.0 million term loan facility (the “2017 Term
Facility” and the loans thereunder, the “Term
Loans”). In addition, the Company replaced its previous
$50.0 million five-year asset based loan facility (the
“ABL Facility”) with a new $75.0 million five-year
revolving credit facility (the “2017 Revolving
Facility” and, together with the 2017 Term Facility, the
“2017 Facility”). The terms of the 2017 Facility are
set forth in that certain Amended and Restated Credit Agreement,
dated as of March 30, 2017 (the “Credit
Agreement”), by and among Holdings, the Company, the lenders
from time to time party thereto and JPMorgan Chase Bank, N.A., as
administrative agent and collateral agent. The 2017 Term Facility
was issued net of a $0.7 million discount. The Company has the
right to request an increase to the 2017 Term Facility or request
the establishment of one or more new incremental term loan
facilities, in an aggregate principal amount of up to $75.0
million, plus additional amounts, in certain circumstances.
The net proceeds of the 2017 Term Facility, together with
approximately $15.3 million of cash on hand, were used to
refinance in full the aggregate remaining principal amount of the
loans outstanding under the 2015 Term Facility and pay related
interest, transaction fees and expenses. No amounts were
outstanding under the ABL Facility at that time. The Company
accounted for the refinancing as both a debt extinguishment and
debt modification by evaluating the refinancing on a creditor by
creditor basis. The Company recorded a loss on extinguishment of
debt of $2.2 million related to the write-off of unamortized debt
issuance costs and incurred general and administrative expenses of
$1.7 million related to third-party costs associated with the
modified debt. In addition, the Company incurred and capitalized
$1.6 million of new debt issuance costs related to the
refinancing.
2017 Term Facility
The Term Loans under the 2017 Term Facility bear interest, with
pricing based from time to time at the Company’s election at
(i) LIBOR plus a spread of 4.50% or (ii) the Base Rate
(as defined in the Credit Agreement) plus a spread of 3.50%.
Interest is payable (i) with respect to LIBOR Term Loans, at
the end of each Interest Period (as defined in the Credit
Agreement) and (ii) with respect to Base Rate Term Loans, at
the end of each quarter. At June 30, 2017, the Company’s
interest rate under the 2017 Term Facility was 5.5%.
The Company is permitted to voluntarily prepay the Term Loans, in
whole or in part, subject to a 1.00% prepayment premium applicable
if, during the first 6 months of the 2017 Term Facility, the
Company makes any prepayment of the Term Loans in connection with a
repricing transaction (as defined in the Credit Agreement). The
2017 Term Facility requires the Company to make mandatory
prepayments of the outstanding Term Loans in certain circumstances.
The 2017 Term Facility amortizes at 1.00% per year until its
June 30, 2022 maturity date.
The Company’s maturities of principal obligations under the
2017 Term Facility are as follows as of June 30, 2017:
(in thousands) Amount
Remainder of 2017 $ 1,375
2018 2,750
2019 2,750
2020 2,750
2021 2,750
2022 261,937
Total principal outstanding 274,312
Unamortized debt discount (2,392 )
Unamortized debt issuance costs (3,241 )
Total 268,679
Less: current portion (2,750 )
Total long-term debt $ 265,929
2017 Revolving Facility
Under the terms of the 2017 Revolving Facility, the lenders
thereunder agreed to extend credit to the Company from time to time
until March 30, 2022 (the “Revolving Termination
Date”) consisting of revolving loans (the “Revolving
Loans” and, together with the Term Loans, the
“Loans”) in an aggregate principal amount not to exceed
$75.0 million (the “Revolving Commitment”) at any
time outstanding. The 2017 Revolving Facility includes a
$20.0 million sub-facility for the issuance of letters of
credit (the “Letters of Credit”). The Letters of Credit
and the borrowings under the 2017 Revolving Facility are expected
to be used for working capital and other general corporate
purposes.
The Revolving Loans under the 2017 Revolving Facility bear
interest, with pricing based from time to time at the
Company’s election at (i) LIBOR plus a spread of 3.50%
or (ii) the Base Rate (as defined in the Credit Agreement)
plus a spread of 2.50%. The 2017 Revolving Facility also includes
an unused line fee, which is set at 0.375% while the
Company’s secured leverage ratio (as defined in the Credit
Agreement) is greater than 3.00 to 1.00 and 0.25% when the
Company’s secured leverage ratio is less than or equal to
3.00 to 1.00.
The Company is permitted to voluntarily prepay the Revolving Loans,
in whole or in part, or reduce or terminate the Revolving
Commitment, in each case, without premium or penalty. On any
business day on which the total amount of outstanding Revolving
Loans and Letters of Credit exceeds the total Revolving Commitment,
the Company must prepay the Revolving Loans in an amount equal to
such excess. As of June 30, 2017, there were no outstanding
borrowings under the 2017 Revolving Facility.
2017 Facility Covenants
The 2017 Facility contains a number of affirmative, negative,
reporting and financial covenants, in each case subject to certain
exceptions and materiality thresholds. The 2017 Facility requires
the Company to be in quarterly compliance, measured on a trailing
four quarter basis, with a financial covenant. The maximum
consolidated leverage ratio permitted by the financial covenant is
displayed in the table below: 2017 Facility Financial Covenant
Period
Consolidated Leverage Ratio
Q2 2017 through Q1 2018 5.00 to 1.00
Q2 2018 through Q1 2019 4.75 to 1.00
Thereafter 4.50 to 1.00
The 2017 Facility contains usual and customary restrictions on the
ability of the Company and its subsidiaries to: (i) incur
additional indebtedness (ii) create liens;
(iii) consolidate, merge, sell or otherwise dispose of all or
substantially all of its assets; (iv) sell certain assets;
(v) pay dividends on, repurchase or make distributions in
respect of capital stock or make other restricted payments;
(vi) make certain investments; (vii) repay subordinated
indebtedness prior to stated maturity; and (viii) enter into
certain transactions with its affiliates.
Upon an event of default, the administrative agent under the Credit
Agreement will have the right to declare the Loans and other
obligations outstanding immediately due and payable and all
commitments immediately terminated or reduced.
The 2017 Facility is guaranteed by Holdings and Lantheus MI Real
Estate, LLC (“LMI-RE”), and obligations under the 2017
Facility are generally secured by first priority liens over
substantially all of the assets of each of LMI, Holdings and LMI-RE
(subject to customary exclusions set forth in the transaction
documents) owned as of March 30, 2017 or thereafter
acquired. |
