| Item 1.01 | Entry into a Material Definitive Agreement. |
On February 23, 2023, Sotera Health Company (the “Company”) and Sotera Health Holdings, LLC, as the Borrower (“SHH”) entered into the First Lien Credit Agreement dated as of February 23, 2023, by and among the Company, SHH, JPMorgan Chase Bank, N.A., as First Lien Administrative Agent (the “Administrative Agent”) and the lenders party thereto (the “Credit Agreement”). The Credit Agreement provides for, among other things, a new Term Loan B facility in an aggregate principal amount of $500,000,000 (the “Term Facility” and the loans thereunder, the “Term Loans”).
The Term Loans will bear a variable rate of interest, at the Company’s option, of a per annum rate equal to either (x) the Term Secured Overnight Financing Rate (SOFR) (which is subject to a minimum floor of 0.50%), plus an applicable margin of 3.75% or (y) the Base Rate (as defined in the Credit Agreement) plus an applicable margin of 2.75%. The Credit Agreement also includes a “soft call” premium of 1.00% for certain repricing transactions with respect to the Term Loans that occur within the six-month period after the effective date of the Credit Agreement.
The Term Loans amortize at a rate of 1% per annum and the Term Facility matures on December 13, 2026.
All of SHH’s obligations under the Credit Agreement are guaranteed by the Company and certain wholly owned material US subsidiaries of SHH (such entities, the “Guarantors”). All of SHH’s and the Guarantor’s obligations are secured on a first-priority basis, subject to certain customary exceptions and exclusions, on substantially all of the Company’s, SHH’s and the Guarantors’ assets. The Credit Agreement contains customary representations and warranties, events of default, affirmative and negative covenants, including, among other things, restrictions on indebtedness, liens, investments, fundamental changes, dispositions and dividends and other distributions, which are substantially the same as those under the Company’s and SHH’s existing credit agreement.
As previously disclosed, the Company plans to use the proceeds of the Term Facility, along with cash on hand, to fund the proposed $408 million ethylene oxide litigation settlement in Cook County, IL (assuming the conditions thereto are satisfied), to pay down existing borrowings under the Company’s revolving credit facility, to further enhance liquidity and for other general corporate purposes.
The proposed $408 million ethylene oxide litigation settlement in Cook County, IL is subject to a number of conditions and limitations, as described in the Current Report on Form 8-K filed by the Company on January 9, 2023 with the Securities and Exchange Commission.
