ConMed arranges for $265 million term loans, $585 million revolvers

By Angela McDaniels

Tacoma, Wash., Feb. 7 – ConMed Corp. entered into an amended and restated credit facility on Thursday that provides it with a $485 million U.S. dollar secured revolving credit facility, a $100 million multi-currency secured revolver, a $150 million secured term loan and a $115 million secured delayed-draw term loan, according to an 8-K filing with the Securities and Exchange Commission.

The company drew $247 million under the U.S. dollar revolver at closing. It used the proceeds of the $150 million term loan and the revolver draw to repay amounts outstanding under the prior credit agreement.

The delayed-draw term loan may be drawn in connection with the closing of ConMed’s acquisition of Palmerton Holdings, Inc. and Buffalo Filter LLC.

The revolvers will terminate and the term loan will mature on the earlier of Feb. 7, 2024 and 91 days prior to the earliest scheduled maturity date of ConMed’s 2.625% convertible senior notes due 2024 if, as of such date, more than $150 million principal amount of the convertibles (or any refinancing thereof) remains outstanding.

If undrawn, the commitments to provide the delayed-draw term loan will expire on the earlier of the closing date of the acquisition and March 20.

If drawn, the delayed-draw term loan will mature on the same date as the term loan.

The initial interest rate for the facilities is Libor plus 187.5 basis points. The margin varies from 112.5 bps to 225 bps depending on the company’s consolidated senior secured leverage ratio.

The initial commitment fee for the revolvers is 30 bps. ConMed must also pay commitment fees on the delayed-draw term loan commitments at a rate of 30 bps, payable on the earlier of the funding of the delayed-draw term loan and the termination of the commitments to provide the delayed-draw term loan. The commitment fees vary from 17.5 bps to 40 bps, also depending on leverage.

The credit agreement contains three financial covenants:

• A consolidated senior secured leverage ratio that must initially be maintained at a level of not greater than 4.25 to 1.00, with step-downs to 4.00 to 1.00 on Dec. 31, 2019 and 3.75 to 1.00 on Dec. 31, 2020, with some step-ups available in the event of a material acquisition;

• A consolidated total leverage ratio that must be maintained at a level of not greater than 5.75 to 1.00, with step-downs to 5.50 to 1.00 on Dec. 31, 2019, 5.25 to 1.00 on Dec. 31, 2020 and 5.00 to 1.00 on Dec. 31, 2021, with some step-ups available in the event of a material acquisition; and

• A consolidated fixed charge coverage ratio that must be maintained at a level of not less than 2.25 to 1.00.

If the acquisition is not completed by March 20, the required consolidated senior secured leverage ratio will initially be 4.00 to 1.00, stepping down to 3.75 to 1.00 on Dec. 31, 2020, and the required consolidated total leverage ratio will initially be 5.00 to 1.00, stepping down to 4.75 to 1.00 on Dec. 31, 2020.

JPMorgan Chase Bank, NA, Bank of America Merrill Lynch, Wells Fargo Securities LLC and Barclays Bank plc are the joint lead arrangers and joint bookrunners. Bank of America, NA and Wells Fargo Bank, NA are the syndication agents. JPMorgan is the administrative agent.

The credit agreement comprises commitments from 14 financial institutions.

The credit agreement allows ConMed to designate foreign subsidiaries as additional borrowers. ConMed has designated Linvatec Nederland BV as an additional borrower.

The credit agreement amends and restates a credit agreement dated Jan. 4, 2016.

As of Dec. 31, there were about $456.4 million in borrowings outstanding under the prior credit agreement.

ConMed is a Utica, N.Y.-based medical technology company. Buffalo Filter is a Lancaster, N.Y.-based provider of surgical smoke evacuation and laparoscopic surgery solutions.

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