| Item 1.01 | Entry into a Material Definitive Agreement |
On June 27, 2019, our wholly-owned subsidiary Lantheus Medical Imaging, Inc. (“LMI”) refinanced its existing indebtedness with a new term loan facility and a new revolving credit facility (collectively, these transactions are referred to as the “Refinancing”).
In order to consummate the Refinancing, LMI entered into a Credit Agreement (the “Credit Agreement”) by and among Wells Fargo Bank, N.A., as administrative agent (in that capacity, the “Administrative Agent”) and collateral agent, each of the lenders from time to time party thereto (the “Lenders”) and Lantheus Holdings, Inc. (the “Company”). The Credit Agreement (i) replaces in its entirety LMI’s existing $275.0 million five-year term loan agreement (the facility thereunder, the “Old Term Facility”) with a new five-year $200.0 million term loan facility (the “New Term Facility” and, the loans thereunder, the “Term Loans”) and (ii) replaces in its entirety the previous $75.0 million five-year revolving credit facility (the “Old Revolving Facility” and, together with the Old Term Facility, the “Old Facility”) with a new $200.0 million five-year revolving credit facility (the “New Revolving Facility” and, together with the New Term Facility, the “New Facility”).
The net proceeds of the New Term Facility, together with approximately $73 million of cash on hand, were used to refinance in full the aggregate remaining principal amount of the loans outstanding under the Old Facility and pay related interest, transaction fees and expenses.
New Term Facility
The Term Loans under the New Term Facility bear interest, with pricing based from time to time at LMI’s election at (i) LIBOR plus a spread that ranges from 1.25% to 2.25% based on LMI’s Total Net Leverage Ratio (as defined in the Credit Agreement) or (ii) the Base Rate (as defined in the Credit Agreement) plus a spread that ranges from 0.25% to 1.25% based on LMI’s Total Net Leverage Ratio. The New Term Facility amortizes at a rate ranging from 5% to 7.5% per year until its June 27, 2024 maturity date.
LMI is permitted to voluntarily prepay the Term Loans, in whole or in part without premium or penalty. The New Term Facility requires LMI to make mandatory prepayments of the outstanding Term Loans in certain circumstances.
LMI has the right to request an increase to the New Term Facility or request the establishment of one or more new incremental term loan facilities, in an aggregate principal amount of up to $100.0 million,plus additional amounts in certain circumstances (collectively, the “Incremental Cap”).
New Revolving Facility
Under the terms of the New Revolving Facility, the Lenders thereunder may extend credit to LMI from time to time until June 27, 2024 (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 $200.0 million (the “Revolving Commitment”) at any time outstanding. The New Revolving Facility includes a $20.0 millionsub-facility for the issuance of letters of credit (the “Letters of Credit”). The New Revolving Facility includes a $10.0 millionsub-facility for swingline loans (the “Swingline Loans”). The Letters of Credit, Swingline Loans and the borrowings under the New Revolving Facility are expected to be used for working capital and for other general corporate purposes. The New Revolving Facility terminates on the Revolving Termination Date.
The Revolving Loans under the New Revolving Facility bear interest, with pricing based from time to time at LMI’s election at (i) LIBOR plus a spread that ranges from 1.25% to 2.25% based on LMI’s Total Net Leverage Ratio or (ii) the Base Rate (as defined in the Credit Agreement) plus a spread that ranges from 0.25% to 1.25% based on LMI’s Total Net Leverage Ratio. The New Revolving Facility also includes a commitment fee, which is set at a rate ranging from 0.15% to 0.30% based on LMI’s Total Net Leverage Ratio.
LMI 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, Letters of Credit and the Swingline Loans exceeds the total Revolving Commitment, LMI must prepay the Revolving Loans in an amount equal to such excess.
LMI has the right to request an increase to the Revolving Commitment in an aggregate principal amount of up to the Incremental Cap.
Other Terms
The New Facility contains a number of affirmative, negative and reporting covenants, as well as a financial maintenance covenant pursuant to which LMI is required to, among other things, be in quarterly compliance, measured on a trailing four quarter basis, with a Total Net Leverage Ratio (as defined in the Credit Agreement) of 4.00 to 1.00 through the quarter ending June 30, 2020, 3.75 to 1.00 through the quarter ending June 30, 2021 and 3.50 to 1.00 thereafter. Upon an event of default, the Administrative Agent will have the right to declare the Loans and other obligations outstanding immediately due and payable and all commitments immediately terminated or reduced.
