| Item 1.01 | Entry into a Material Definitive Agreement. |
On December 13, 2018, CONMED Corporation, a New York corporation (“CONMED”), entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with Filtration Group FGC LLC, a Delaware limited liability company (“Filtration Group”). Pursuant to the Securities Purchase Agreement, CONMED will acquire all of the issued and outstanding common stock of Palmerton Holdings, Inc., a New York corporation (“PHI”), and all of the issued and outstanding equity securities of Buffalo Filter LLC, a Delaware limited liability company (“BF LLC” and, together with PHI, the “Acquired Companies”), each of which is a wholly owned subsidiary of Filtration Group (the “Acquisition”).
Pursuant to the Securities Purchase Agreement, upon the closing of the Acquisition (the “Closing”) CONMED will pay Filtration Group an aggregate purchase price of $365 million in cash, as adjusted and payable pursuant to the Securities Purchase Agreement (the “Purchase Price”). The adjustments to the Purchase Price include, among others, (i) a working capital adjustment, (ii) an upward adjustment for certain cash held by Filtration Group at the Closing, and (iii) a downward adjustment for the amount of indebtedness of the Acquired Companies, expenses related to the transaction and other related fees and expenses.
The Securities Purchase Agreement contains customary representations, warranties and covenants of CONMED and Filtration Group, including an agreement by Filtration Group to cause each of the Acquired Companies to conduct its business in the ordinary course until the Closing. The Acquisition is subject to customary conditions to Closing, including, among others, expiration (or early termination) of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. There is no financing condition to the Acquisition. Completion of the Acquisition is expected to occur in the first quarter of 2019.
The representations, warranties and covenants contained in the Securities Purchase Agreement (i) were made solely for the purposes of the Securities Purchase Agreement, (ii) were made solely for the benefit of the parties to the Securities Purchase Agreement, (iii) were made only as of the date of the Securities Purchase Agreement or such other date as is specified in the Securities Purchase Agreement, (iv) have been included in the Securities Purchase Agreement as a method of allocating risks and governing the contractual rights and relationships among the parties to the Securities Purchase Agreement rather than establishing matters as facts, (v) have been qualified by certain confidential disclosures not reflected in the text of the Securities Purchase Agreement, and (vi) may apply standards of materiality and other qualifications, exceptions and limitations that may differ from what may be viewed as material by investors. Accordingly, none of CONMED’s stockholders or any other third parties should rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts, circumstances or conditions of CONMED, Filtration Group, the Acquired Companies, any of parties’ respective subsidiaries, any of the parties’ respective affiliates or any other person. The Securities Purchase Agreement and the summaries thereof are not intended to modify or supplement any factual disclosures about CONMED and should not be relied upon as disclosure about CONMED or its business. The Securities Purchase Agreement should not be read alone, but should instead be read in conjunction with other information regarding CONMED that is or will be disclosed in reports that CONMED files from time to time with the Securities and Exchange Commission (the “SEC”). Factual disclosures about CONMED contained in public reports filed with the SEC may supplement, update or modify the factual disclosures contained in the Securities Purchase Agreement.
CONMED intends to finance the Purchase Price using a combination of (i) the issuance of convertible notes or other securities in a private placement or a public offering and (ii) an incremental term loan under its existing senior secured credit agreement, which was previously filed as Exhibit 10.1 to CONMED’s Current Report on Form8-K filed with the SEC on January 4, 2016 (the “Existing Credit Agreement”). CONMED has also obtained a commitment from JPMorgan Chase Bank, N.A. (“JPM”) to provide a new senior unsecured bridge loan facility in an aggregate principal amount of up to $365 million if the foregoing financing measures cannot be completed prior to the consummation of the Acquisition.
In addition, CONMED intends to either (i) obtain an amendment to the Existing Credit Agreement to permit the consummation of the Acquisition or (ii) replace the credit facilities under the Existing Credit Agreement with a new senior secured revolving credit facility in an aggregate principal amount of $525 million and a new senior secured term loan facility in an aggregate principal amount of $150 million (which term loan facility amount may be increased in lieu of the incremental term loan described above). In the event neither the amendment nor the replacement facility can be obtained, JPM has also committed to provide a new senior secured credit facility to refinance in full the Existing Credit Agreement. Such senior secured credit facility will comprise a revolving credit facility in an aggregate principal amount of $525 million and a term loan facility in an aggregate principal amount equal to the lesser of $147,656,250 and the aggregate amount of the term loans outstanding under the Existing Credit Agreement at the Closing.
